UK gilt yields plunge ahead of super-long 30-year auction amid Brexit uncertainties

The United Kingdom’s gilt yields plunged during European trading hours Monday ahead of the country’s super-long 30-year auction, scheduled to be held on September 24 by 09:45GMT amid a slew of external uncertainties concerning Brexit.

The yield on the benchmark 10-year gilts, plunged 7-1/2 basis points to 0.554 percent, the 30-year yield slumped 7 basis points to 0.977 percent and the yield on the short-term 2-year plummeted 6 basis points to 0.473 percent by 10:35GMT.

Brexit will inevitably dominate the UK news-flow this week. But while Johnson will again cross paths with a number of EU leaders early in the week, and discussions will continue at official level, any significant breakthroughs in negotiation cannot be expected, Daiwa Capital Markets reported.

Indeed, the UK proposals sent to the Commission last week were clearly unrealistic, being wholly incompatible with EU red lines with respect to avoiding border infrastructure on the island of Ireland. And submission of any meaningful proposal from the UK side seems highly unlikely, at least until next week’s Conservative Party conference has passed, the report added.

"While risks of a no-deal Brexit at the end of October reduced somewhat last month, this survey is likely to signal ongoing going weakness in sector, with further falls in output and orders at the end of Q3. The GfK consumer confidence survey, due on Friday, is nevertheless likely to suggest that sentiment among households remains relatively weak," Daiwa further commented in the report.

Meanwhile, the FTSE 100 traded tad -0.57 percent lower at 7,304.15 by 10:40GMT.