The gilt-edged market was affected by a number of developments in 1993. Despite the size of the PSBR, the funding of which has substantially increased the size of the gilt-edged market, yields fell markedly. This reduction in yields mirrored developments in other OECD government bond markets; it also reflected the lower level of inflation and, perhaps more importantly, lower inflation expectations in the United Kingdom. Against this background, the PSBR was funded without serious difficulty. This article, which continues the annual series begun in 1989 on the gilt-edged market, describes gilt sales and market turnover, as well as developments in the derivatives markets and the business of the gilt-edged market makers during 1993.
The gilt-edged market: developments in 1993