The latest from London: UK gilt records biggest one-day fall since Brexit referendum

London equity markets rallied yesterday after the Bank of England took them by surprise by keeping rates unchanged, while most commentators were expecting a rate hike. But the BoE voted 7-2 to keep interest rates at 0.1%.

Britain's two-year gilt yield dropped by around 20 bps after the announcement - the biggest one-day fall since 2016.

Source: Statista

Yesterday, real estate stocks were among the best performers. BP also did well, rising as much as 11%, after profits topped expectations.

The FTSE is still up today, led by banks and drugmakers. However, IAG dipped 0.7% after it warned of a larger-than-expected loss of $3.5 billion for 2021, hampered by travel restrictions caused by the pandemic.

Bond curves are mainly steeper as expectations of a rate hike faded -- the two-year Treasury yield has dropped more than 10 basis points compared with 0.5640% last week.

Today, investors will be assessing euro area retail sales and U.S. monthly payrolls data.

 

Things to read:

Boris Johnson cannot escape the costs of Brexit (financial Times)

U.K. Rate-Decision Surprise Ripples Across Global Bond Markets (WSJ)

Fourth Wave Spreads In Europe (Bloomberg)