UK gilts flat ahead of June employment report, July CPI data

The United Kingdom’s gilts gained during European trading hours Monday ahead of the country’s employment report for the month of June, scheduled to be released on August 13 by 08:30GMT and the consumer price inflation (CPI) data for July, due on the following day by 08:30GMT.

The yield on the benchmark 10-year gilts, remained tad higher at 0.447 percent, the 30-year yield rose 1-1/2 basis points to 1.174 percent and the yield on the short-term 2-year hovered around 0.446 percent by 10:55GMT.

This week will bring key figures on the labour market (tomorrow), inflation (Wednesday) and retail sector (Thursday). In particular, employment growth is expected to have picked up in the three months to June, from an equivalent increase of 26.6k in May, not least due to the strength in April (up 434k), Daiwa Capital Markets reported.

So, the headline unemployment rate is expected to remain unchanged at 3.8 percent in June.  Wednesday’s inflation release is expected to show both the headline and core CPI rates moving sideways in July at 2.0 percent y/y and 1.8 percent y/y respectively. But producer price figures are likely to illustrate the disinflationary pressures down the pipeline, not least associated with falling energy prices, the report added.

But while prices on the high street have also declined over recent months, surveys suggest that retail sales weakened in July – indeed, sales are expected to have declined 0.5 percent m/m, albeit only partly offsetting the increase in June. In the markets, the DMO will sell 2049 Gilts tomorrow, Daiwa further noted in the report.

Meanwhile, the FTSE 100 traded nearly tad lower at 7,220.65 by 11:10GMT.