One reason for this is a relatively benign one: there are increasing hopes of a global economic recovery. Alan Higgins at Coutts says increased confidence that Japanese economic policy will support their economy, allied to signs of stronger growth in the US, should encourage global investors to shift out of government bonds and into riskier assets such as equities.
There are signs that the UK might share in this recovery. A recent survey by the CBI found that manufacturers expect output to grow in the next three months, and a survey of regional economic conditions by the Bank of England found evidence of a rise in exports, investment intentions and activity in the business services sector.
But economists believe there might also be a less benign reason for gilts to sell off. They suspect the chancellor's decision to change the Bank of England's remit will give new governor Mark Carney a green light to tolerate a continued overshoot of the inflation target as he tries to stimulate growth. Mr Higgins says: "If this pushes up inflation expectations without any significant progress on deficit reduction, gilts may suffer."
Nevertheless, many do not expect a sharp sell-off. One reason for this is that the same "monetary activism" that might raise inflation expectations will entail the Bank of England buying gilts. Economists expect another £50bn of quantitative easing this year - equivalent to the Bank buying half of the gilts that the government will sell.
What's more, the Cyprus crisis has increased risks in the euro area, thus underlining gilts' safe haven status. One reason for this is that the imposition of big losses on larger deposit-holders increases the risk of runs on banks elsewhere in the euro area, if depositors fear they might get into trouble. This, says Citibank's Steven Englander, "may make any future bank-related crisis more intense". But even if a full-blown crisis doesn't occur, the threat of such runs might inhibit banks from lending, thus intensifying the credit squeeze in the region.
Gilts, therefore, still have value as insurance against crisis and economic stagnation. The problem is that insurance can sometimes be expensive.
