June 9, 2020 / 10:58 AM / a month ago

HSBC cuts year-end 10-year UK gilt yield forecast to 0%

FILE PHOTO: HSBC's building in Canary Wharf is seen behind a City of London sign outside Billingsgate Market in London, Britain, August 8, 2018. REUTERS/Hannah McKay

LONDON (Reuters) - HSBC (HSBA.L) said on Tuesday that it had lowered its year-end forecast on 10-year British government bond yields to 0%, given a small probability of negative interest rates and a sense that rates will stay low for a long period.

Britain’s 10-year gilt yield is trading at around 0.32% GB10YT=RR.

“We cut our year-end 10-year yield forecast to 0% from 20 bps previously,” HSBC analysts said in a note.

“Our low yield bias captures the greater weight we place on the likelihood that Bank Rate stays low for a prolonged period, as well as the increased possibility of negative rates.”

Reporting by Dhara Ranasinghe, Editing by Lawrence White

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