Gilts Yield Curve Signals Long-Term Slowdown

The industrial slowdown is here to stay if the yield curve of government papers is any indication. The drop in the yields on government paper at the longer end is sharper than that at the shorter end, making it clear that the view on long term interest rates is soft as industry does not foresee any pick-up in demand.

During the financial year so far, the yield on 10-year paper fell by around 330 basis point in April to 7.21 per cent today. In the case of 15-year paper, the drop was as sharp as 425 basis points to 7.20 per cent during the same period.