Everyone knows of Harold Wilson’s quip about a week being a long time in politics. Lately, a week has often seemed a very long time in the market for gilt-edged stock, too, such have been the wild changes in the price of securitised government debt. And, just as a good old-fashioned sterling crisis back in 1964 prompted Wilson’s famous remark, crises often not far removed from the value of sterling have triggered the market’s swings in the past 12 months.
Chart 1 shows these ups and downs via the inverse symmetry of the price and yield to maturity of Treasury 4.25 per cent 2032, a benchmark gilts stock that started out as long-dated when it was issued in 2000 and is now at the short end of the market’s medium-dated stocks.
