The UK gilts slumped on Wednesday after data showed higher than expected April industrial production. Also, firm crude oil prices shifted traders from fixed income securities. The 10-year yield is also bearing down on its record low of 1.23 percent, which can easily be tested, especially ahead of the country's EU referendum. Meanwhile, the yield on the benchmark 10-year gilts rose more than 2 basis point to 1.288 percent by 11:50 GMT.
The surprisingly strong 2.0 percent m/m jump in Apr UK industrial production, driven by a 2.3 percent m/m surge in manufacturing and marking the largest rate of increase since July 2012, dwarfs the flat reading predicted by the market and builds on March's 0.3 percent m/m increase.
The recent polls showed the outcome of the referendum is too close to call, raising the possibility that Britain might leave the EU after 43 years of membership in the bloc. A new UK-EU poll by ORB for the Telegraph, among people saying they will definitely vote in the referendum on the 23rd, 48 percent said they will vote to remain and 47 percent to leave the union.
According to the latest poll conducted by YouGov on weekend over the ‘Brexit’ referendum, 43 percent voted to 'remain' in the European Union, compared to 41 percent as of May 31, 42 percent voted to 'leave' the EU, compared to 41 percent on May 31. The rest remained indecisive, either declining to vote or not knowing which side to favour.
Moreover, the WTO director general Azevedo said that the UK business competitiveness will be badly hit if the country votes to leave the EU. He adds that although trade will continue, it could be on worse/costlier terms.
In addition, the World Bank lowered its 2016 global growth forecast to 2.4 percent from the earlier forecast of 2.9 percent in January due to stubbornly low commodity prices, sluggish demand in advanced economies, weak trade and diminishing capital flows.
Crude oil prices jumped beyond $50 mark by hitting 2016 high as supply disruptions in Nigeria and likely declines in the U.S. crude inventories and production fuelled bullish sentiment. The International benchmark Brent futures rose 1.54 percent to $52.23 and West Texas Intermediate (WTI) jumped 1.17 percent to $50.95 by 12:10 GMT.
Meanwhile, The FTSE 100 trading up 0.06 at 6,290 by 12:10 GMT.
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