UK gilts rally as investors shrug-off wider-than-expected rise in April retail sales

The UK gilts rallied Thursday as investors largely shrugged off the wider-than-expected rise in the country’s retail sales for the month of April.

The yield on the benchmark 10-year gilts, slumped 3 basis points to 1.10 percent, the super-long 30-year bond yields plunged 3-1/2 basis points to 1.73 percent while the yield on the short-term 2-year traded 1-1/2 basis points lower at 0.12 percent by 10:10 GMT.

UK’s retail sales were better than expected in April, more than making up for a disappointing March and adding to data which suggest the economy started the second quarter on a strong footing. Questions persist, however, as to whether this upturn has legs. Retail sales rebounded 2.3 percent in April, according to the Office for National Statistics, up 4.0 percent on a year ago and recovering nicely from a 1.4 percent decline in March.

Lastly, the near-term outlook for the retail sector is challenging as the combination of rising prices and falling real pay looks set to hit consumer spending and hurt economic growth.

Meanwhile, the FTSE 100 fell 1.44 percent or 107.22 points to 7,394.75 by 09:50 GMT, while at 09:00GMT, the FxWirePro's Hourly Pound Strength Index remained slightly bullish at 82.19 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex