UK gilts tad higher after construction PMI slips in June, 10-year auction in focus

The UK gilts remained tad higher Tuesday after reading the country’s lower construction PMI for the month of June, released earlier today. Also, the 10-year auction, scheduled to be held on July 6 will add more clarity to the debt market.

The yield on the benchmark 10-year gilts, slumped 1-1/2 basis points to 1.24 percent, the super-long 30-year bond yields also plunged 1-1/2 basis points to 1.86 percent and the yield on the short-term 2-year too traded 1-1/2 basis points lower at 0.32 percent by 10:20 GMT.

At 54.8 in June, down from 56.0 in May, the seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) registered above the 50.0 no-change mark for the tenth month running. Although signalling a solid upturn in overall business activity, the rate of expansion eased from May’s 17-month peak.

"Survey respondents commented on renewed caution among clients, in response to heightened political and economic uncertainty. Fragile business sentiment led to delayed decision-making on large projects and greater concern about the outlook for workloads during the next 12 months. While construction firms remain upbeat overall about their near-term growth prospects, the degree of confidence fell to its lowest so far this year," Tim Moore, Senior Economist at IHS Markit commented.

Meanwhile, the FTSE 100 traded 0.20 percent lower at 7,361.75 by 10:30 GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained slightly bullish at 82.06 (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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