1 May 2015
UK Gilt yields drop on concerns of slowing manufacturing activity
FXStreet (Mumbai) - The yields on the short duration and long duration Gilts in the UK fell into losses after the gauge of manufacturing activity in the UK fell more than expected.
The seasonally adjusted Markit/CIPS Purchasing Manager’s Index (PMI) printed at seven-month low of 51.9 in April, which is well below the downwardly revised March reading of 54.0. The consensus estimate had called for a reading of 54.6.
Consequently, the 10-year Gilt yield fell 3.6 basis points to 1.798%, while the 30-year yield fell 4.2 basis points to 2.513%. At the short-end, the 2-year yield, which mimics short term interest rate expectation, fell one basis points to 0.52%.
Though the manufacturing sector is not a key part of UK GDP, still the actual number was a big miss on expectations, which led to a sharp drop in yields amid the election uncertainty.
The seasonally adjusted Markit/CIPS Purchasing Manager’s Index (PMI) printed at seven-month low of 51.9 in April, which is well below the downwardly revised March reading of 54.0. The consensus estimate had called for a reading of 54.6.
Consequently, the 10-year Gilt yield fell 3.6 basis points to 1.798%, while the 30-year yield fell 4.2 basis points to 2.513%. At the short-end, the 2-year yield, which mimics short term interest rate expectation, fell one basis points to 0.52%.
Though the manufacturing sector is not a key part of UK GDP, still the actual number was a big miss on expectations, which led to a sharp drop in yields amid the election uncertainty.