There are plenty of reasons to fear that investors' love affair with gilts won't be sustained.
Prices should adjust so that total expected returns on gilts of all maturities are the same.
While the FTSE 100 slipped and U.K. gilts fell back, sterling ticked higher against the dollar.
German bunds, U.K. gilts, and U.S. Treasurys are yielding well under 2 percent in nominal terms.
So some portion of them invest in inflation protected gilts rather than non-inflation protected ones.
Gilts prices have fallen (ie yields have risen) as a result of the announcement.
Foreign investors have been net buyers of gilts since July, according to Bank of England data.
Even so, the rumour was enough to excite the financial markets, and especially that for gilts.
For a start, it is mainly pension funds, saddled with long-term liabilities, that are clamouring for more long gilts.
Governments, meanwhile, will issue debt papers (like gilts, treasuries and bunds) in euros.
George Osborne, the Chancellor, has announced that the UK will be looking to issue 100 year gilts or government bonds.
So can that additional demand be created without the price of gilts falling and implied borrowing costs for the government rising?
The yields on ten-year Treasury bonds and British gilts have both risen by more than half a percentage point since late November.
The process of steering public finances toward a sustainable path long term interest rates (the yield on gilts) would have been delayed .
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Based on the OBR's revised projections for government borrowing, investors are expected to buy astonishing quantities of gilts over the coming five years.
Even though, for instance, the Bank of England is holding the very same UK gilts it bought between March 2009 and Jan. 2010.
Market insiders also question whether an eventual U.K. downgrade would dent the relative safe-haven allure of U.K. government bonds, also known as gilts.
As well as helping the Monetary Policy Committee to fulfil its inflationary aims, the quantitative easing policy has helped to stoke demand for gilts.
At around 77 basis points, the premium to insure UK five-year gilts is 55% less than the cost of insuring equivalent French government debt.
Crucially, it states that the present value of future liabilities must be calculated by using the yield on long gilts as a discount rate.
The amount of new gilts it would have had to issue a couple of years ago to set up the bad bank was prohibitively great.
The question now is who will step in to buy all these new gilts now that the Bank of England has withdrawn from the market.
"For gilt investors, future cash flows on existing index-linked gilts will continue to be calculated by reference to RPI, " said the Economic Secretary, Sajid Javid.
One worry is that the public finances are in a mess, which might undermine confidence among foreign investors who hold a third of all gilts.
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The government counters that there is plenty of demand for gilts and that there are still plenty of investors snapping up UK government debt at its auctions.
Some pundits blame the problem on a supply shortage: if the government must balance its budget (naughty, that), it should issue gilts anyway, and invest the proceeds.
They have benefited from the rush to issue gilts by Her Majesty's government as they seek to raise the finance to pay the bill for the bank bailout.
At best there is a precautionary case: without fiscal tightening, the Tories fear, bond yields are bound to rise, especially when the Bank of England stops buying gilts.
Although there are worries about underlying obligations that are not counted, such as unfunded public-service pensions, these do not enjoy the same degree of formal government backing as gilts.
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