The UK gilts continue to strengthen on Tuesday as investors have grown increasingly jittery after the recent opinion polls indicated that the momentum is growing for the leave camp.
Meanwhile, the yield on the benchmark 10-year gilts fell more than 5-1/2 basis points to all-time low of 1.156 percent, yield on super-long 30-year bonds dipped more than 4-1/2 basis point to 1.988 percent and the yield on short-term 2-year note tumbled more than 5 basis points to 0.325 percent by 09:10 GMT.
Following the global debt market, the benchmark 10-year US Treasury note yield seen marching lower towards 1.50 percent mark. The German 10-year bund yields fell below zero for the first time to -0.001 percent. The 15-year JGB yield dip below zero for the first time, it is down at -0.001 percent and the benchmark 10-year JGB yield hit a fresh all-time low of -0.162 percent.
The latest polls by various corporate bodies in the United Kingdom in run up to the June 23 Brexit referendum indicate that the percentage of citizens in favor of “leaving” the European Union (EU) has outnumbered those who want to “remain”, raising the possibility that Britain might leave the EU after 43 years of membership in the bloc.
According to a recent poll on Brexit by YouGov, showed 46 percent of participant are in favour of ‘Leave’ while 39 percent wanted to ‘Remain’, rest being indecisive. Further, a new UK poll on the EU by ICM for the Guardian shows a 6 percent lead for the Leave side (53-47 percent), when undecided of 6-7 percent were excluded. Reportedly the results were the same for polls conducted online and by phone. This contrasts with prior rumours of a similarly-sized pro-Remain balance.
According to the latest Betfair odds, the implied probability of the UK voting to remain in the EU has now fallen to 55 percent, down from 59 percent earlier and around 64 percent yesterday. Last Thursday the implied probability to remain peaked at 78 percent.
In addition, the UK consumer inflation rose 0.2 percent m/m (0.3 percent y/y) in May, lower than the market consensus of 0.3 percent m/m (0.4 percent y/y), from 0.1 percent (0.3 percent) in April. Similarly, Core CPI rose 1.2 percent y/y, against market consensus of 1.3 percent y/y, from prior 1.2 percent.
Today, crude oil prices fell as investors stay risk-averse ahead of a referendum that could end Britain's membership in the European Union. Apart from this, prices were also weighed by the prospect of bigger crude stocks in the U.S. The International benchmark Brent futures fell 1.27 percent to $49.71 and West Texas Intermediate (WTI) dipped 1.49 percent to $48.15 by 09:10 GMT.
We foresee that the benchmark 10-year gilts yield likely to slid to a record low of 1.10 percent ahead of potentially seismic events this month including Britain’s referendum on European Union membership and the Federal Reserve meeting.
Markets will remain keen to focus on May claimant count change and unemployment rate on Wednesday (08:30 GMT), retail sales and BoE interest rate decision on Thursday.
Meanwhile, The FTSE 100 trading down 1.24 percent at 5,970 by 09:10 GMT.
The material has been provided by InstaForex Company – www.instaforex.com