UK gilts gain after June manufacturing PMI disappoints investors; 5-year auction, BoE’s Carney eyed

The United Kingdom’s gilts gained during European session Monday after the country’s manufacturing PMI for the month of June disappointed market participants, failing to meet estimates as well as down from the prior reading in May.

Investors shall now be focussing on Britain’s construction sector PMI, along with the 5-year auction and Governor of Bank of England (BoE), Mark Carney’s speech, all scheduled on July 2 for further direction in the debt market.

The yield on the benchmark 10-year gilts, suffered nearly 2 basis points to 0.816 percent, the 30-year yield fell 1-1/2 basis points to 1.456 percent, and the yield on the short-term 2-year also traded 1-1/2 basis points lower at 0.601 percent by 10:50GMT.

At 48.0 in June, down from 49.4 in May, the headline seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) fell for the third consecutive month to its lowest level since February 2013. The PMI has posted below the no-change mark for two months in a row, the first back-to-back declines since early-2013.

Politics are set to remain prominent in the UK in the coming week as the Conservative leadership contest continues with further hustings between the candidates. But Parliamentary machinations about Brexit will also be back in focus, as the House of Commons will vote on new legislative amendments tabled by MPs opposed to the UK leaving the EU without a deal, Daiwa Capital Markets reported.

Meanwhile, the FTSE 100 remained 1.19 percent higher at 7,513.78 by 10:55GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at 8.66 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex