UK gilts tumble as latest Brexit poll

June 20, 2016

The UK gilts continue to trade lower on Monday as recent polls suggested that ‘Remain’ camp is ahead in the run-up to the EU referendum against ‘Leave’. Also, rising crude oil prices and firm equities drove-out investors from fixed income securities.

The yield on the benchmark 10-year gilts rose more than 8 basis points to 1.226 percent, yield on super-long 40-year bonds also jumped nearly 8 basis points to 1.879 percent and the yield on short-term 2-year note climbed nearly 7 basis points to 0.459 percent by 10:00 GMT.

A recent opinion poll showed that British voters have swung and now started to favour remaining in the European Union. A YouGov poll for The Sunday Times newspaper published at the weekend showed 44 percent supported remaining in the EU, as compared to 43 percent who supported leaving, based on interviews conducted on Thursday and Friday. Two other polls also showed public opinion tilted towards the 'Remain' camp after the killing of a UK politician Jo Cox on last Thursday.

The implied probability of a 'Remain' vote in Thursday's EU referendum has hardened further, to 74.6 percent, after jumping to 72 percent earlier in the Asian session, up from 60 percent to 67 percent, on Friday, according to the latest odds from bookmaker Betfair.

Also, the final European Union referendum phone poll by BMG Research showed Bremain at 53.3 percent vs Brexit on 46.7 percent. On the other hand, including the ‘undecided’, vote for Remain stood at 46 percent vs Leave 43 percent and undecided 11 percent. The online poll has Leave 55 percent Remain compared to Leave 45 percent.

A British member of parliament, Jo Cox, was shot dead on last Thursday, resulting in the suspension of campaigning for this week’s referendum on the country's EU membership. Cox was one of the members of parliament advocating continued British membership.

The crude oil prices jumped more than 1 percent due to weaker US dollar and easing fears of a UK exit from the European Union. The International benchmark Brent futures rose 1.97 percent to $50.13 and West Texas Intermediate (WTI) climbed 1.63 percent to $48.76 by 09:00 GMT.

Meanwhile, the FTSE 100 trading up 2.69 percent at 6,183 by 10:00 GMT.

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