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German bond spread blows out to 30-year high as gilts crushed

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LONDON — The gap between British and German government bond yields soared on Monday past 200 basis points, the highest since Britain crashed out of the Exchange Rate Mechanism and adopted inflation-targeting in 1992, as investors unloaded gilts at a ferocious pace.

The spread touched a high of 208 basis points at 0835 GMT, its widest since April 1992, according to Refinitiv data.

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At 0940 GMT, 10-year gilt yields were 31 basis points up on the day at 4.14%, just off a 12-year high struck earlier in the day.

The gap between the two bond yields was for decades viewed as a proxy for British inflation-fighting credibility versus low-inflation Germany, whose Bundesbank the British sought to emulate.

The sustained narrowing of the spread after the Bank of England became operationally independent of the government in 1997 had been viewed by British economic policymakers as a major achievement. (Reporting by Andy Bruce; editing by David Milliken)

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