The UK gilts traded sideways Monday ahead of the country’s 10-year auction, scheduled to be held on January 9 at 10:45GMT in an otherwise nearly silent week. However, investors shall remain keen to watch the country’s manufacturing production and trade balance data, due on January 10 for further direction in the debt market.
The yield on the benchmark 10-year gilts, rose nearly 1 basis point to 1.25 percent, the super-long 30-year bond yields nearly flat at 1.79 percent and the yield on the short-term 2-year hovered around 0.050 percent at 08:45GMT.
In the UK the most notable day this week will be Wednesday when the ONS releases its short-term output indicators, including industrial production, construction output, and trade figures. Given that the manufacturing PMI and other surveys from this sector were upbeat in November, we would expect to see manufacturing output posting a seventh consecutive monthly increase. But despite the strength of export orders in recent months’ PMIs, the goods trade deficit is likely to have remained above £10bn in November.
Further, looking at the construction sector, its activity growth was quite disappointing in 2017 and given particularly high volatility in these data, it remains to be seen how momentum changed towards the end of the year. Over the rest of the week, the most notable UK data will be tomorrow’s BRC sales monitor, which will provide clues on the overall health of December retail sales and consumer sentiment overall. The initial reports from individual retailers so far have provided a mixed picture of household spending ahead of Christmas.
Meanwhile, the FTSE 100 traded 0.13 percent lower at 7,715.50 by 08:45 GMT, while at 08:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at 31.97 (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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