Reuters logo
Gilt yields near one-month low as Britain starts clock on Brexit
March 29, 2017 / 4:19 PM / 8 months ago

Gilt yields near one-month low as Britain starts clock on Brexit

    LONDON, March 29 (Reuters) - British government bonds
rallied to their highest in almost a month on Wednesday as Prime
Minister Theresa May formally started two years of talks to
leave the European Union,
     Demand was boosted by end-of-quarter buying across major
markets as well as by market uncertainty about Brexit.
    Benchmark 10-year gilt yields             sank 4 basis
points on the day to 1.149 percent, their lowest since March 6,
while 20-year gilt yields             touched their lowest since
Feb. 28 at 1.664 percent as prices rose.
    "There are lots of flows attributable to the quarter end,
and a lot of people are very unwilling to sit on cash," ADM
Investor Services strategist Marc Ostwald said.
    Both gilts and euro zone debt got a boost after sources told
Reuters that European Central Bank policymakers are wary of
changing their policy message next month and want to reassure
investors that their easy money policy is far from ending.
            
    U.S. Treasuries were also up on the day, and Ostwald said
gilts looked on track to be the best-performing major advanced
economy bonds this quarter, as investors had homed in on the
risks to growth posed by Brexit.
    Data from the Bank of England earlier on Wednesday showed
the weakest three-monthly growth in consumer borrowing in nearly
two years, raising doubts about the health of the consumer
economy as inflation picked up.             
    The coming quarter would offer investors a better guide as
to how much inflation was likely to overshoot the BoE's target
as a result of sterling's tumble after last June's Brexit vote,
Ostwald said.
    Some analysts fear markets have underestimated how much
inflation will rise in Britain -- potentially laying the
groundwork for a sell-off in long-dated gilts.             
    Ostwald said it would take time before the impact of the
Brexit talks became clear for the gilt market.
    "It probably will be a little impervious for the time being,
as it is not until we get an idea of some of the costs that may
arise, and how sterling will react, that we get any concrete
implications," he said.
    For now, Ostwald expected the uncertain economic outlook to
dissuade most BoE policymakers from talking of higher interest
rates, even as inflation picks up.
    Late on Tuesday BoE policymaker Ian McCafferty - who opposed
restarting bond purchases last year - shied away from suggesting
that it would soon be time to raise rates during a radio
phone-in show.             
            
    June long gilt future          127.25 (+0.39)
    June 2017 short sterling         99.625  (-0.005)           
        
    Dec 2017 short sterling         99.50 (unch.)
    10-year gilt yield             1.15 pct (-4 bps)
    
-------------------KEY MARKET DATA---------------------------
Long Gilt futures            Gilt benchmark chain           
Short Stg futures            Cash market quotes             
Deposit rates                Sterling cross rates         
UK debt speedguide          
-------------------KEY MARKET REPORTS--------------------------
Gilts                       Sterling                  
Euro Debt                   Dollar                    
U.S. Treasuries             Debt reports             
--------------------GILT STRIPS DATA -------------------------
Gilt strips data                 All gilt strips                
Gilt strips IO                   Gilt strips PO                

 (Reporting by David Milliken Editing by Jeremy Gaunt)
  

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below