The yield on British government 10-year bonds fell to an all-time low in Monday’s trading session, as investors boosted demand on safe haven assets.
The decline in U.K. government debt comes as the prices of these bonds rise since there is an inverse relationship between the bond price and its yield.
The yield on 10-year British government bonds dropped 0.5 percent, sending the return to a new all-time low of 0.492 percent, amidst political uncertainty in the U.K. as Prime Minister Boris Johnson fueled expectations of a snap election.
Also, markets were rattled by the escalation in trade war between the two largest economies, as the Chinese side vowed to fight back after the U.S president Donald trump Donald trump decided to impose a 10 percent tariffs on all Chinese imports worth more than $300 billion.
Although investors still fear of a hard Brexit in October after new Prime Minister Boris Johnson confirmed to leave whatever the outcome, the U.K governments bonds are still attractive as the Bank of England has room to ease policy more than other major central banks.
Meanwhile, the pound sterling rose 0.08 percent to $1.22, after falling 0.5 percent earlier to $1.2102. The pound fell against the euro to 1.088, after touching the weakest since September 2017.
It is worth mentioning that the U.K. released its services
PMI on Monday, where the report showed a rise to a nine-month high in July,
more than analysts' expectations. The reading came in at 51.4 points, compared
to 50.2 points in June.