News Headline Summary

UK index-linked bonds open the session sharply higher after the ONS said the UK will continue to publish RPI, formula will not change

- It was widely expected that the ONS will bring RPI into line with CPI, tightening the spread between the calculations, which could cut RPI by up to 1%. This would have major implications for pension funds that hold index linked gilts slashing interest payments to them by reducing the break even rates on respective index-linked gilts. However, today the ONS said that the decision means no impact on holders of RPI linked Gilts.

Update details:

- UK 10s I/L (index linked) trading at 128.313, up from 125.500 level at which securities closed yesterday.
- UK 10y B/E (break even) rates at 2.8904, up from 2.650 level at which securities closed yesterday.

Print 08:03, 10 Jan 2013 - Market Analysis - Source: RANsquawk