Pound, Non-Resident Selling Pressuring Gilts: Analysts
(Bloomberg) -- U.K. 10-year yields gilt hit the highest level since the Brexit vote due to a mix of factors, according to strategists at Natixis and Nordea.
- Non-resident selling flows and inflation among main causes for gilt weakness, Natixis strategist Cyril Regnat writes in e-mailed comments
- Theresa May seems to be a “hardliner” when it comes to the Brexit negotiations
- Sterling is weakening due to non-resident selling flows as they switch their pounds vs USD or EUR
- There is definitely some contagion from the U.S. as well given the positive and historical correlation between U.S. and U.K. yields
- Sterling is a big part of the story, as it would generate inflation in the U.K., Nordea strategist Jan Von Gerich says in separate e-mailed comments
- Says today’s gilt moves is affected by the higher yields in euro-area and U.S. as well; the renewed Brexit uncertainty makes gilts look less attractive for foreign investors
- NOTE: USTs Stabilize After Gilts, EGBs Weigh in Early Trade
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Cyril Regnat (Natixis SA)
Theresa May (United Kingdom of Great Britain and Northern Ireland)
Jan Von Gerich (Nordea Bank AB)
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