UK gilts plunge despite fall in September construction PMI; all eyes on services PMI

The UK gilts plunged Tuesday as investors have largely shrugged-off the fall in the country’s crucial construction PMI for the month of September. Now, investors will remain glued to read the services PMI for September, scheduled to be released on October 4 by 08:30GMT.

The yield on the benchmark 10-year gilts, jumped nearly 5 basis points to 1.40 percent, the super-long 30-year bond yields climbed 3-1/2 basis points to 1.91 percent and the yield on the short-term 2-year also traded 3-1/2 basis points lower at 0.46 percent by 09:05 GMT.

The seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) registered 48.1 in September, down from 51.1 in August and below the crucial 50.0 no-change threshold mark, for the first time in 13 months. The latest reading signalled the fastest decline in overall construction output since July 2016.

The latest decline in work on commercial development projects was the second-sharpest since February 2013 (exceeded only by the post-EU referendum dip seen last July). Survey respondents widely commented on a headwind from political and economic uncertainty, alongside extended lead times for budget approvals among clients.

Meanwhile, the FTSE 100 traded 0.06 percent higher at 7,442.75 by 09:15 GMT, while at 09:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at -43.62 (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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