LONDON The volume and value of UK government bonds changing hands since Britain's decision in June to leave the European Union has soared by as much 400 percent, figures on Tuesday showed.
The frenetic trading in UK sovereign debt comes as investors try to chart a path through the uncertain outlook for British economic growth, inflation and interest rates in the coming months and years after the June 23 Brexit vote.
Figures from Trax, a subsidiary of MarketAxess, show that the daily average value of 10-year gilts traded since June is 4.9 billion pounds, almost five times higher than the daily average of 1.1 billion pounds from January through May.
The volume of trades has also jumped, more than doubling to a daily average of 263 trades from 110 pre-referendum.
"The market is grappling with how to model for the long-term political changes," said Scott Eaton, Chief Operating Office at MarketAxess Europe.
"The full political and social impact of Brexit has yet to be negotiated and realised, and the markets are clearly coping with volatility, as evidenced by the swings in sterling and the intense activity in the 10-year gilt," he said.
Trax provides post-trade services for around two-thirds of all fixed income transactions in Europe.
Trading in UK markets has been extremely volatile since June 23. The 10-year gilt yield plunged to a record low 0.5 percent in August GB10YT=RR but this week rose back above 1.0 percent for the first time since June.
Sterling has tumbled to a 31-year low against the dollar GBP=, and is now one of the worst performing currencies in the world against the greenback this year. The Bank of England is investigating a "flash crash" last Friday that saw the pound plunge around 10 percent at one stage.
Sterling is within a whisker of hitting its lowest since at least the 1970s on a broader, trade-weighted basis =GBP, but this weakness has helped London-listed stocks claw back all their initial Brexit losses and hit new all-time highs .FTSE .FTMC.
(Reporting by Jamie McGeever; Editing by Catherine Evans)