UK gilts surge ahead of 10-year auction, BoE MPC members’ speeches

The United Kingdom’s surged during European trading hours Tuesday ahead of the country’s 10-year auction, scheduled to be held on February 25 by 10:45GMT and a host of speeches by members of the Bank of England’s (BoE) Monetary Policy Committee (MPC), all due to be delivered through this week, for further direction in the debt market.

The yield on the benchmark 10-year gilts, plunged 7 basis points to 0.524 percent, the 30-year yield slumped 6 basis points to 0.946 percent and the yield on the short-term 2-year lost nearly 5-1/2 basis points to 0.407 percent by 11:20GMT.

This week will be relatively quiet for top-tier economic releases from the UK, with just a couple of surveys providing an update on conditions in the middle of Q1. In particular, tomorrow’s CBI distributive trades survey is expected to show that retail sales growth remained relatively subdued in February having signalled no meaningful growth at the start of the year, Daiwa Capital Markets reported.

This would also be consistent with still relatively underwhelming consumer confidence, which Friday’s GfK survey is likely to confirm – indeed, the headline sentiment index is expected to have fallen very slightly from the seventeen-month high of -9 recorded in January, the report added.

BoE MPC members scheduled to speak in the coming week include Chief Economist Haldane (today and Friday) and Deputy Governor Cunliffe (Thursday). In the markets, the DMO will sell 10Y Gilts tomorrow, Daiwa further noted in the report.

Meanwhile, the FTSE 100 plunged over -3.50 percent to 7,144.96 by 11:30GMT.