LONDON: British government bonds held steady early on Tuesday as investors awaited public sector borrowing figures, the first release in a busy week of data, and a 10-year debt auction.
Investors will focus on British public sector borrowing figures 0930 GMT and an industrial survey by the Confederation of British Industry at 1100 GMT for clues on the health of the economy.
"UK public finance data has been consistent in its disappointment over the last year," said Barclays strategists.
"We will be interested to see if the current trend of weak receipts and strong expenditure still holds true in the December release, as this will do little to change our negative view on medium and longer dated asset swaps in the UK," they added.
Britain's Debt Management Office will also hold an auction of 1.75 billion pounds ($2.77 billion) of 4 percent 2022 gilts, which strategists expect will draw good demand.
"The auction stock has cheapened versus its immediate neighbours ... We expect a good auction here on the back of relative value cheapening," said Lloyds strategists.
At 0838 GMT, the March gilt future was 3 ticks higher at 116.66, while the equivalent Bund future was 7 ticks lower.
Later on Tuesday, investors will comb a speech by Bank of England Governor Mervyn King for clues to where monetary policy is heading. The bank has held off injecting more cash into the economy since November.
"His (King) January speeches have historically been noteworthy," said Barclays strategists.
"It was in January 2009 that he first talked explicitly about quantitative easing, in 2010, he outlined the benefits that had come from central banks globally following expansionary policy and in 2011 he discussed the fall in real wages ... So the speech tends to be one that reflects on recent events and sets his stall ahead of the February inflation report round," they added.
Minutes from the Bank of England's last policy meeting and fourth-quarter gross domestic product data will follow later in the week.
Ten-year gilt yields were steady at 2.06 percent, while their spread with Bund yields was a touch tighter at 45 basis points.
Comments
Comments are closed for this article.