British and Spanish 10-Year Bond Yields Reach All-Time Lows

Yields on British and Spanish 10-year sovereign bonds reached record lows on Tuesday as the U.K. implements drastic measures to avert a recession, while Spain struggles to form a stable government.

The yield on British bonds dipped to a historic low of 0.592% before subsequently rising to 0.611%. This fluctuation occurred alongside comments from Ian McCafferty, a member of the Bank of England’s policy committee, who suggested in an article that further monetary easing may be necessary. He indicated, “If the economy shows signs of declining in accordance with initial survey results, I think additional easing is likely to be needed, and this can be implemented in the coming months.”

Last week, the Bank of England lowered interest rates to 0.25%, the lowest level on record, and expanded its asset purchase program to counteract potential recessionary pressures following Britain’s exit from the European Union.

Meanwhile, Spanish bond yields also fell to unprecedented levels, dipping below 1% for the first time ever. After reaching an intraday low of 0.973%, the yield for Spanish bonds was last recorded at 0.982%. This contrasts sharply with yields as high as 7.8% experienced during the peak of the eurozone debt crisis in July 2012.

The decrease in borrowing costs comes despite indications that Spain is on course to hold a third round of elections, as political parties continue to struggle to establish a government.