Bonds: Brexit could see BoE cut Bank Rate by 50 basis points, JP Morgan says

These were the movements in the most widely-followed 10-year sovereign bond yields:

US: 1.84% (+0bp)

UK: 1.45% (-0bp)

Germany: 0.18% (+1bp)

Spain: 1.58% (+1bp)

France: 0.81% (+1bp)

Italy: 1.48% (+1bp)

Portugal: 3.08% (-3bp)

Greece: 7.26% (-19bp)

Japan: -0.09% (+2bp)

Gilts were unperturbed at the start of the week despite a slate of negative analysis regarding what the short and medium-term implication of Brexit might be on the country´s economy.

Economists at JP Morgan said Brexit could cut the UK´s rate of economic growth by about one full percentage point over the four quarters following such a decision, Bloomberg reported.

Among some of the other policy-relevant implications, it might raise the rate of unemployment to 5.6% and push mortgage spreads higher by 50 basis points.

Inflation expectations would not come unhinged but the consumer price index could climb to as high as 3% by the end of 2017, the investment bank said.

Employing a so-called Taylor-rule approach, JP Morgan analyst Allan Monks said under such circumstances a 50 basis point cut to Bank Rate would not be unreasonable.

"This framework suggests the currency would have to fall by 30 percent to make a rate cut look unlikely.”

Acting as a backdrop on Monday, while the yield on the benchmark 10-year US Treasury note was unchanged, that on two year government dent increased by two basis points to 0.90%, further flattening the US interest rate yield curve, a trend typically associated with a negative impact on banks´ margins and the flow of credit.

That came on the heels of another raft of rather hawkish Fedspeak over the weekend and on Monday.

In the euro area, following their latest analysis of Greece´s debt sustainability economists at the International Monetary Fund called on the country´s creditors to grant Athens significant debt relief in order to safeguard the viability of the country´s public finances in the long-run.

Over the weekend, lawmakers in Athens approved further austerity measures including tax increases and cuts to pensions.