UK gilts edge slightly higher ahead of BoE Governor Carney’s speech

The United Kingdom’s gilts edged tad higher during mid-week European trading hours Wednesday amid a muted trading session that witnessed data of little economic significance ahead of a speech by Bank of England (BoE) Governor Mark Carney, scheduled to be delivered on January 9 by 09:30GMT  .

The yield on the benchmark 10-year gilts, edged tad nearly 1 basis point down to 0.787 percent, the 30-year yield also fell close to 1 basis point to 1.240 percent and the yield on the short-term 2-year suffered 2 basis points to 0.589 percent by 11:25GMT.

"Average house prices rose by 4 percent over 2019, at the top of our predicted range of 2 percent to 4 percent growth for the year. This was driven by a monthly gain of 1.7% in December which was the biggest monthly increase of 2019, pushing up the year-on-year growth rate and reflecting that December 2018 was a particularly weak month. Looking ahead, we expect uncertainty in the economy to ease somewhat in 2020, which should see transaction volumes increase and further price growth made possible by an improvement in households’ real incomes," said Russell Galley, Managing Director, Halifax, which released the data.

"Beyond that, the big picture is that any acceleration in house price growth is unlikely to be sustained. After all, prices are still very high relative to incomes and interest rates are close to their floor – so the fundamentals leave little room for a sustained surge in house prices. Indeed, we expect house price growth to end 2020 and 2021 at below 2 percent per year," Capital Economics commented in its latest report.

Meanwhile, the FTSE 100 remained flat at 7,570.25 by 11:30GMT.