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Investors had scooped up U.S. Treasuries, German Bunds and
British Gilts in recent days as they loaded up on lower-risk
government debt in case the "Leave" camp wins Thursday's
referendum.
Benchmark U.S. yields fell to near four-year lows last week,
while German 10-year yield slipped into negative territory for
the first time ever. Longer-dated British and Japanese
government yields declined to record lows.
"Should Brexit instead occur, government bond yields would most
likely fall further reflecting the associated increase in macro
and financial uncertainty," the U.S. investment bank's co-head
of global macro & markets research Francesco Garzarelli wrote in
a research note on Monday.
If "Leave" wins, the 10-year Treasury yield may fall by 30 basis
points to 1.35 percent, while the 10-year Bund may decline by 15
basis points to -0.10 percent. The U.K. 10-year yield may slip
by 15 basis points, Garzarelli said.
Italian government debt yield would rise to 1.80-2.00 percent,
according to the note.
On the other hand, were "Remain" to come out ahead the gilt
10-year yield may rise as much 20-25 basis points from Friday's
close. Its U.S. and German counterparts may rise by 20 basis
points and 10 basis points, respectively.
Italian yield would fall about 30 basis points, Garzarelli
wrote.
On Monday, investors pared their safehaven holdings of these
bonds following the latest polls that showed a shift in voter
sentiment with renewed support to "Remain" following the killing
of parliament member Jo Cox, who was a proponent for Britain
stay in the EU.
(Reporting by Richard Leong; Editing by Jeffrey Benkoe and Alan
Crosby)
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