The further drop in gilt yields appears to have reflected declining expectations for GDP growth and related falls in long-term interest rate expectations, rather than fiscal developments. Indeed, the spread of gilt over German bund yields has widened in recent weeks as sentiment in euro-zone bond markets has improved, while the cost of insuring against UK default has remained on an upward trend. Meanwhile, evidence suggests that the Monetary Policy Committee’s asset purchases are continuing to have much smaller effects on gilt yields than the first round of purchases in 2009/10.