UK gilts slump ahead of 10-year auction, BoE Governor Carney’s speech

The UK gilts slumped Monday as investors await the country’s 10-year auction, scheduled to be held on July 6. Also, the Bank of England (BoE) Governor Mark Carney’s speech, due later today will add more clarity to the debt market.

The yield on the benchmark 10-year gilts, rose 1 basis point to 1.26 percent, the super-long 30-year bond yields climbed 1-1/2 basis points to 1.88 percent while the yield on the short-term 2-year hovered around 0.35 percent by 10:00 GMT.

At 54.3 in June, down from 56.3 in May, the seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) posted its lowest reading in three months. However, the average PMI level over the second quarter as a whole (55.9) was the best registered for three years.

Nevertheless, as the manufacturing sector accounts for only around 10 percent of the UK’s economic activity, the country’s growth outlook will be primarily driven by the dominant services sector, where Wednesday’s service PMI will be much more revealing of the overall outlook for economic activity.

Meanwhile, the FTSE 100 traded 0.27 percent higher at 7,332.50 by 10:50 GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained slightly bullish at 83.53 (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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