UK gilts gain on disappointing October industrial production

The UK gilts gained Wednesday after recent data showed that the country’s industrial production declined higher than expected in October.

The yield on the benchmark 10-year gilts, which moves inversely to its price, fell 2-1/2 basis points to 1.39 percent, the super-long 30-year bond yield dipped 1-1/2 basis points to 2.03 percent and the yield on short-term 2-year slid 1-1/2 basis points to 0.12 percent by 09:50 GMT.

The 1.3 percent m/m drop in October UK industrial production is hugely disappointing, when set against the consensus expectation of a 0.2 percent m/m rise and even more so when taking into account the fact that it already fell in September, by 0.4 percent m/m.

And despite the revelation that the headline number has been distorted sharply lower by the impact of the closure of a North Sea oil field, there are barely any crumbs of comfort provided in the underlying breakdown as this also shows a 0.9 percent m/m decline in manufacturing output, that more than reverses the 0.6 percent m/m climb in September.

Moreover, crude oil prices declined as investors chased in profit after a long rally ahead of OPEC and non-OPEC meeting on Saturday. The International benchmark Brent futures fell 0.40 percent to $53.70 and West Texas Intermediate (WTI) dipped 0.57 percent to $50.64 by 08:30 GMT.

Meanwhile, the FTSE 100 traded 1.32 percent higher at 6,869 by 09:50 GMT. While at 09:00 GMT, the FxWirePro's Hourly GBP Strength Index remained highly bearish at -110.26 (lower than -75 represents purely bearish trend).