In the wake of the UK’s vote for Brexit on 23rd June, long-term government bond yields have fallen further there than in other developed countries. (See Chart below.) Indeed, the 10-year Gilt yield recently declined to a record low of about 0.75%. Despite warnings that such a vote would raise the UK government’s cost of borrowing – the UK has since lost its AAA rating from two more of the major rating agencies – yields have tumbled amid increased demand for safe-havens and expectations of even looser monetary policy.
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