Investors may be too confident that Bank of England Governor Mark Carney will increase interest rates before his U.S. counterpart Janet Yellen.
Two-year gilt yields rose to the highest since 2011 relative to similar-maturity U.S. notes last month as a strengthening U.K. recovery fueled speculation BOE officials might increase the benchmark rate from a record low as early as this year.
The yield difference has since narrowed, and with the American economy springing back to life in the second quarter the spread is set to tighten further, according to strategists at Fathom Consulting and ADM Investor Services International.
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