UK gilts lose ground following better-than-expected April employment report; eyes on May CPI, retail sales

The United Kingdom’s gilts lost ground during European session Tuesday following a better-than-expected employment report for the month of April. Investors will now be focusing on the country’s consumer price inflation (CPI) and retail sales data for the month of May, scheduled to be released on June 13 and 14 by 08:30GMT respectively.

The yield on the benchmark 10-year gilts, rose 1-1/2 basis points to 1.42 percent, the super-long 30-year bond yields gained nearly 1 basis point to 1.87 percent and the yield on the short-term 2-year traded 2-1/2 basis points higher at 0.77 percent by 10:15GMT.

The employment rate reached a record-high 75.6 percent after the economy added 146,000 jobs, more than the 120,000 predicted by economists. The jobless rate held at 4.2 percent, its lowest since 1975.

However, a surprise moderation in the pace of wage growth may suggest the economy retains a margin of spare capacity. Pay growth excluding bonuses slowed to 2.8 percent between February and April, the Office for National Statistics said Tuesday.

For Bank of England policymakers, the question is how quickly the economy uses up whatever slack it has left. Bets on an August interest-rate hike receded on Monday after manufacturing and construction failed to bounce back as forecast in April following snow disruptions the previous month, Bloomberg reported.

Meanwhile, the FTSE 100 traded 0.40 percent lower at 7,706.98 by 10:20 GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at -53.66 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

Lastly, FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest