UK gilts climb as investors remain confused over Brexit state of affairs; await fresh cues

The United Kingdom’s gilts climbed during Thursday’s afternoon session as investors remain confused over the Brexit state of affairs and is awaiting fresh cues for further direction in the debt market.

The yield on the benchmark 10-year gilts, jumped 2 basis points to 1.417 percent, the super-long 30-year bond yields rose 1 basis point to 1.960 percent and the yield on the short-term 2-year traded 3 basis points higher at 0.770 percent by 10:30GMT.

Yesterday evening’s discussions between May and Juncker failed to make a Brexit breakthrough. And the outstanding issues are all politically tricky, including May’s desire for a commitment to strive for frictionless trade in goods in future despite her primary objective of controls on freedom of movement; access to UK fishing waters for French, Dutch and Danish trawlermen; and the Spain’s desire for a veto on future trade arrangements governing Gibraltar.

EU officials will discuss the state of play this morning. But with the tone between May and Juncker still civil, and events still appearing well-choreographed, on balance we expect a breakthrough to be reached when May and Juncker meet again on Saturday, and the draft Withdrawal Agreement and Political Declarations to be agreed at Sunday’s special summit. A far steeper obstacle to May’s Brexit plan will, of course, lie ahead next month when the UK parliament’s ratification will be sought, Daiwa Capital Markets reported.

Meanwhile, the FTSE 100 slumped 1.40 percent to 6,954.00 by 10:35GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at -39.84 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex