UK gilts sink following heavy sell-off in U.S. Treasuries, December retail sales in focus

The UK gilts sunk Thursday following heavy sell-off witnessed in the U.S. Treasuries post the hawkish comments delivered by the Federal Reserve Chair Janet Yellen late Wednesday. Also, investors are looking forward to the release of retail sales data on Friday for further direction in the debt market.

The yield on the benchmark 10-year gilts, which moves inversely to its price, rose nearly 4 basis points to 1.38 percent, the super-long 30-year bond yields also moved higher by 3-1/2 basis points to 2.02 percent while the yield on short-term 2-year jumped 2 basis points to 0.22 percent by 09:50 GMT.

The central bank governor mentioned that the US is near full employment and with inflation figures stabilizing, there is need for gradual Fed tightening, although she did not mention the exact timing of an interest rate hike.

Lastly, according to the latest Citi/YouGov survey, UK’s inflation expectations for the short term remained broadly steady at 2.4 percent whilst expectations for the longer term have risen to 3.0 percent up from 2.8 percent in November.

Meanwhile, the FTSE 100 fell 0.65 percent to 7,201 by 10:10 GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at -62.82 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex