UK gilts jump ahead of June CPI, BoE Governor Carney’s speech

The UK gilts jumped Monday as investors wait to watch the country’s consumer price inflation for the month of May, scheduled to be released on July 18. Also, the Bank of England Governor Mark Carney’s speech, due on the same day will provide further direction to the debt market.

The yield on the benchmark 10-year gilts, plunged 2-1/2 basis points to 1.28 percent, the super-long 30-year bond yields slumped 2 basis points to 1.90 percent and the yield on the short-term 2-year also traded nearly 2 basis points lower at 0.30 percent by 10:00 GMT.

With regard to UK economic data, the theme of high inflation and its adverse effect on consumer spending is likely to dominate the economic news flow, which brings data on inflation (tomorrow) and retail sales (on Thursday). Having risen by more than 1.0ppt since the start of the year to 2.9 percent y/y in May, CPI inflation is expected to have remained unchanged in June, with the core rate also likely to have moved sideways, at 2.6 percent y/y, Daiwa Europe reported.

"While we expect retail sales to have fallen in June for a second consecutive month, thanks to particularly strong results in April, Q2 as a whole is likely to have seen retail sales rise by about 1.0 percent q/q", the report said.

Meanwhile, the FTSE 100 traded 0.70 percent lower at 7,316.50 by 10:10 GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained highly bullish at 116.02 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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