LONDON, Oct 11 (Reuters) - Short-dated British government
bond yields soared on Monday after Bank of England rate-setters
stressed the need to keep a lid on expectations of higher
inflation in interviews published over the weekend.
The 2-year gilt yield touched 0.603% shortly
after the market opened, up 7 basis points on the day. Yields
rose across the range of maturities after BoE Governor Andrew
Bailey said he was "concerned" about inflation shooting past the
BoE's 2% target.
The 10-year yield rose to 1.205%, up 4 bps since
Friday and marking its highest since May 2019.
The gap between yields for the 10-year gilt and the
equivalent German Bund rose to 132 bps, the biggest
spread since 2016 as investors bet heavily that the BoE will
hike interests long before the European Central Bank does.
Money markets also ramped up expectations that the BoE will
hike rates in November.
(Reporting by Andy Bruce; editing by Sarah Young)