The British bond yields were trading modestly firmer on Tuesday as investors cooled on safe-haven assets amid gains in riskier assets including stocks and oil. Also, investors focus on Federal Reserve’s monetary policy meeting and Federal Reserve Chair Janet Yellen’s speech in an attempt to estimate the Fed's likely next step to raise interest rate. The yield on the benchmark 10-year bonds, which moves inversely to its price, moved higher 0.37 pct to 1.616 pct and the yield on the 3-year bonds jumped 0.99 pct to 0.716 pct by 0935 GMT.
The United States Federal Reserve policymakers meet on April 26-27 and markets largely expect that interest rates will be kept steady with a slim possibility of a surprise hike. Focus will be on the press statement and whether there is a shift across the Fed members to a more hawkish stance. Even subtle changes in the wording of its statement will tell us a lot about the probability of a June hike. Recent comments have been far more hawkish than the market is currently pricing in on rates.
The United Kingdom Gilts have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Bank of England's target. Today, crude oil prices rose by tracking weak greenback and stream on fresh liquidity into the market. Meanwhile, Crude oil prices continue to rover around 5-month high. The International benchmark Brent futures rose 0.97 pct to $44.75 and West Texas Intermediate (WTI) climbed 0.52 pct to $42.86 by 0935 GMT.
We foresee that the BOE will also be wary of increasing interest rates until after a June referendum on Britain’s membership of the European Union, one of several uncertainties they say are weighing on the prospects for the global economy. The 10-year gilts yield is meanwhile being pulled up to the 1.60 pct marks for the first time in 2-months, but can hardly resist breaking higher to 1.65-1.70 pct, if Treasuries and Bunds do the same.
The investors also look forward to Q1 Gross Domestic Product (GDP) data due on Wednesday (0830 GMT. Meanwhile, The FTSE 100 rose 0.42 pct or 26.08 points to 6,287 by 0935 GMT.
The material has been provided by InstaForex Company – www.instaforex.com