UK gilts plunge following upbeat March services PMI; investors eye BoE Governor Carney’s speech

The UK gilts plunged Wednesday as investors moved away from safe-haven assets after reading the country’s upbeat services PMI for the month of March. Also, market participants are curiously eyeing the Bank of England (BoE) Governor Mark Carney’s speech scheduled to be held on April 7.

The yield on the benchmark 10-year gilts, which moves inversely to its price, climbed 1-1/2 basis points to 1.08 percent, the super-long 30-year bond yields jumped 2 basis points to 1.68 percent while the yield on the short-term 3-year traded 1/2 basis point higher at 0.22 percent by 09:20 GMT.

The headline seasonally adjusted Markit/CIPS Services PMI Business Activity Index picked up from 53.3 in February to 55.0 in March, and therefore above the 50.0 no-change value for the eighth consecutive month. Moreover, the latest reading signalled a marked increase in business activity and the fastest pace of expansion since December 2016. This signalled a marked rebound from the five-month low seen in February.

"Much of the disappointment in growth so far this year has been evident in consumer-oriented sectors, in part linked to spending and incomes being squeezed by higher prices," said Chris Williamson, Chief Business Economist, IHS Markit.

Lastly, investors shall also remain glued to observe the country’s February manufacturing production and trade balance data, due to be released by end of this week for further direction in the debt market.

Meanwhile, the FTSE 100 rose 0.19 percent or 14.18 points to 7,299.50 by 09:40 GMT, while at 09:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at 69.27 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex