Investing.com – Yields on British and Spanish 10-year sovereign bonds hit a record low on Tuesday as the U.K. economy takes extraordinary measures in order to avoid a recession and the euro area’s third largest economy grapples to form a government.
The yield on the U.K. gilt hit a record low of 0.592% before pulling back to 0.611% even as Bank of England (BoE) policy member Ian McCafferty wrote for The Times that further easing may be necessary.
“If the economy proves to have turned down in line with the initial survey signals, I believe that more easing is likely to be required, but that can easily be delivered in coming months,” McCafferty wrote.
The BoE cut rates to a record low of 0.25% last week and increased its asset purchase program in an effort to head off a recession in the U.K. in the wake of Britain’s decision to leave the European Union.
Spanish 10-year government bond yields also hit a record low on Tuesday, passing below 1% for the first time in its history. After hitting an intraday low of 0.973%, the Spanish bond yield last traded at 0.982%.
That compared to a yield of as high as 7.8% during the height of the euro zone debt crisis in July 2012.
The record low in borrowing costs even as signs pointed to the fact that Spain was on track to hold a third round of elections with politicians unable to reach an agreement to form government.