UK 10Y gilt yield slides to all time low of 1.20 pct, likely to test 1.15 pct mark

The UK gilts continue to strengthen on Monday as 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.

Meanwhile, the yield on the benchmark 10-year gilts fell nearly 3 basis point to all-time low of 1.206 percent by 10:00 GMT.

In the global debt market, the benchmark 10-year US Treasury note yield marching lower towards 1.50 percent mark (fell nearly 2 basis points to 1.621 percent). The 10-year JGB hit a fresh all-time low of minus 0.158 percent. The German 10-year bund yield hovers above zero at 0.016 percent.

According to a new Brexit poll by ORB published by the Independent on Saturday, the Leave camp has suddenly surged ahead with a lead of 55 percent, as compared to 45 percent for Remain.

On the other hand, the United Kingdom bookmaker, Betfair has reduced European Union referendum Remain probability to 70 percent compared to previous implied volatility of 78 percent, after ORB poll.

Today, crude oil prices fell on a stronger dollar, after jumping beyond $51 mark on Thursday. The International benchmark Brent futures fell 0.83 percent to $51.52 and West Texas Intermediate (WTI) dipped 1.03 percent to $50.04 by 07:30 GMT.

We foresee that the benchmark 10-year gilts yield likely to slid to a record low of 1.15 percent ahead of potentially seismic events this month including Britain’s referendum on European Union membership, Bank of Japan and the Federal Reserve meeting.

Markets will remain keen to focus on next week’s May CPI on Tuesday (08:30 GMT), 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 0.57 at 6,081 by 10:00 GMT.