UK gilts continue mixed after November services PMI disappoints; 30-year auction in focus

The United Kingdom’s gilts continued to trade mixed during Wednesday afternoon session after the country’s services PMI for the month of November disappointed market participants and investors will now keenly eye the 30-year auction, scheduled to be held on December 6 by 10:45GMT for detailed direction in the debt market.

The yield on the benchmark 10-year gilts, jumped nearly 4 basis points to 1.320 percent, the super-long 30-year bond yields slumped nearly 3 basis points to 1.924 percent and the yield on the short-term 2-year traded 4-1/2 basis points higher at 0.768 percent by 10:00GMT.

The slowdown in business activity growth was highlighted by a fall in the headline seasonally adjusted IHS Markit/CIPS UK Services PMI Business Activity Index to 50.4 in November. This was down from 52.2 in October and the lowest reading since July 2016. The latest figure was only slightly above the 50.0 no-change value and therefore pointed to a marginal overall expansion of service sector output.

Further, the seasonally adjusted All Sector Output Index posted at 51.0 in November, down from 52.2 in October, to signal the slowest rate of expansion since July 2016.

"With the lowest optimism about the future since July 2016 and minimal job hiring, the main driver of the UK economy looks like it’s grinding to a halt as it teeters too close to the no change mark for comfort. Respondents have provided plenty of evidence that the prime cause of this slowdown must be firmly placed on the shoulders of Brexit indecision," said Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply.

Meanwhile, the FTSE 100 traded 1.18 percent lower at 6,939.57 by 10:10GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at -58.85 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex