UK gilts slide ahead of BoE’s monetary policy meeting, March manufacturing production

The UK gilts slid Monday as investors wait to watch the Bank of England’s (BoE) monetary policy meeting, scheduled to be held on May 11. Also, the country’s manufacturing production for the month of March will be eyed for further direction in the debt market.

The yield on the benchmark 10-year gilts, rose 1/2 basis point to 1.12 percent, the super-long 30-year bond yields also climbed 1/2 basis point to 1.79 percent while the yield on the short-term 3-year traded flat at 0.23 percent by 09:40 GMT.

The BoE’s monetary policy committee (MPC) is expected to keep the benchmark policy rate unchanged at its May meeting, maintaining a ‘neutral’ policy bias relative to a market path of interest rates that, compared with February’s Inflation Report, envisages a more gradual withdrawal of monetary stimulus over the forecast horizon.

With the Bank Rate expected to be maintained at 0.25 percent, other aspects of the MPC’s August 2016 package have mostly run their course. Purchases of both gilts and corporate bonds have reached their respective target stocks of GBP435 billion and GBP10 billion and no further expansion of either is expected at this stage, Lloyds Bank reported.

Meanwhile, the FTSE 100 fell 0.04 percent or 2.63 points to 7,297.50 by 10:10 GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at 4.65 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex