Global Market News: US treasury prices rise on Brexit blow

US treasury prices rose on Friday sending yields to two-week lows, as Brexit worries cause volatility

US treasury prices rose on Friday sending yields to two-week lows, as Brexit worries cause volatility.

US treasury prices rose on Friday as Brexit worries caused volatility in markets.

US yields have fallen to two-week lows, after Britain’s draft agreement to exit the European Union forced investors to seek safety in other bonds.

The UK’s key Brexit negotiator Dominic Raab resigned from Prime Minister May’s cabinet on Thursday, resulting in a no-confidence motion to the Prime Minister and her deal.

Political analysts predict after Raab pulls his support things will fold further.

The forex markets responded to the shock news,with the Pound hit the hardest, trading below 1.2750 on Thursday.

IG Market Analyst, Kyle Rodda says yields on UK Gilts plunged on back of unwinding bets of more BOE rate hikes.

“Continental stock indices lost ground, with the DAX shedding 0.5 per cent for the day; however, the plunge in the Pound, coupled with more stable oil and commodity prices overnight, helped the FTSE100 close flat for the day.” Mr Rodda said.

"The pound has been hardest hit naturally: it experienced its steepest intra-day fall in over 12 months." Mr Rodda said.

Brexit concerns cause volatility in the markets

Sterling was last trading at $1.2775, down 1.69% on Friday, the pan-European STOXX 600 index lost 1.06 % while Britain's FTSE 250 dropped 1.3%.

Investors were acting upon uncertainty in early day trade on Friday causing volatility.

The dollar index rose 0.26% with the euro up 0.18% to $1.1328.

In afternoon trading on Thursday the benchmark 10-year Treasury note yields fell to 3.11% from 3.12 %, while US 30-year yields edged up to 3.36%.

IG market analyst Kyle Rodda said the shift in market is also due to US and Chinese negotiations.

“The real impetus for the shift in market sentiment came upon news that US and Chinese negotiators are in the process of knuckling down terms of a trade agreement to be discussed at this month’s G20 meeting.” Mr Rodda said.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IG Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer