UK gilts rise after May consumer price inflation remains unchanged; eyes on May retail sales

The United Kingdom’s gilts rose Wednesday after the country’s consumer price inflation (CPI) data for the month of May remained unchanged and investors will now focus on the retail sales data for the similar period, scheduled to be released on June 14 by 08:30GMT for further direction in the debt market.

The yield on the benchmark 10-year gilts, slipped 1 basis point to 1.38 percent, the super-long 30-year bond yields slumped nearly 2-1/2 basis points to 1.82 percent and the yield on the short-term 3-year traded tad lower at 0.79 percent by 09:50GMT.

The annual change in the consumer price index remained steady at 2.4 percent in May, the same as in April. A poll by Thomson Reuters conducted before the data were released forecast that it would rise to 2.5 percent. The UK pound hit its day’s low after the release of the data.

Economists had expected that rising prices for crude oil would feed into higher transport costs for consumers, raising the level of inflation even as the boost to import prices from the fall in the pound following the EU referendum faded. Liquid fuel prices were up 37.1 percent y/y in May, according to the ONS data.

Meanwhile, the FTSE 100 traded 0.20 percent higher at 7,718.75 by 09:55 GMT, while at 09:00GMT, the FxWirePro's Hourly Pound Strength Index remained highly bearish at -143.17 (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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