U.K Gilts plunge on firm equities

The British 10-year bond prices plunged on Tuesday as a rally in crude oil boosted equity market sentiments. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, moved rose 1.83 pct to 1.506 pct and the yield on the 3-year Treasury bond climbed 2.40 pct to 0.640 pct by 1010 GMT.

The United Kingdom Gilts have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the European Central Bank's target. Crude oil prices rose as Kuwait reported on Sunday that its crude production fell to 1.1 million barrel per day, from up 2.8 million barrel in March as workers went on stick. The International benchmark for crude oil prices, Brent futures rose 2.10 pct to $43.79, while West Texas Intermediate crude oil climbed 1.68 pct to $40.45 by 1025 GMT.

On Wednesday, The Office for National Statistics (ONS) will release the February Unemployment rate figure, which is expected to be unchanged at 5.1 pct and average weekly earnings are expected to show a modest rise to 2.3%, from previous 2.1%.

Lastly, the investors will now focus on the ECB governing council meeting on Thursday, which is expected to culminate in the decision to leave policy unchanged.

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.

Meanwhile, The FTSE 100 rose 0.54 pct or 34.48 points to 6,388 by 1010 GMT.