Gilts Tumble on U.K. Growth Optimism Before U.S. Payrolls Report U.K government bonds fell, pushing 10-year yields to a three-week high, on signs that Britain’s economic recovery is gaining traction, diminishing demand for safer assets. Sterling rallied against the dollar after a construction index based on a survey of purchasing managers exceeded analyst estimates. Britain’s economy will grow faster this year than previously forecast as consumers increase spending, the National Institute of Economic and Social Research said today. A report today will show U.S. payrolls rose by 185,000 in July, after an increase of 195,000 the previous month, according to a Bloomberg News survey of economists. “The U.K. data is not constructive for gilts,” said Jason Simpson, a U.K. rates strategist at Banco Santander SA in London. “All the survey data for July rose and surprised on the upside giving further evidence that the economic recovery has legs and is gathering momentum.” The yield on the 10-year gilt rose seven basis points, or 0.07 percent, to 2.47 percent, at 9:53 a.m. London time, and reached 2.48 percent, the highest since July 9. The price of the 1.75 percent bond due September 2022 dropped 0.565 or 5.65 pounds per 1,000-pound ($1,516) face amount, to 94.14. An index of construction activity jumped to 57 for July, from 51 in June, Markit and the Chartered Institute of Purchasing and Supply in London said in a statement today. That’s the highest since June 2010. The median estimate of 13 economists in a Bloomberg News survey was for 51.5. A reading above 50 indicates expansion. U.K. house prices rose 0.8 percent in July, from 0.3 percent the previous month, Nationwide Building Society said today, signaling further growth in the housing market. Gilts lost 3.1 percent this year through yesterday, according to Bloomberg World Bond Indexes. German bunds declined 1.3 percent and U.S. Treasuries slid 3.1 percent. also kept its main refinancing rate unchanged, at 0.5 percent. The pound rose 0.3 percent to $1.5158, snapping a five-day drop. Sterling appreciated 0.2 percent to 87.19 pence per euro. Sterling has strengthened 0.4 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The euro rose 4.5 percent and the dollar gained 3.2 percent.
Posted on: Fri, 02 Aug 2013 09:44:41 +0000
Trending Topics
Recently Viewed Topics
© 2015