UK gilts nearly steady on mixed September employment report; October CPI in focus

The United Kingdom’s gilts remained nearly flat during European trading hours Tuesday after the country’s labour market report for the month of September remained mixed. However, Britain’s consumer price inflation (CPI) for the month of October, scheduled to be released on November 13 by 09:30GMT, shall add further direction in the labour market.

The yield on the benchmark 10-year gilts, hovered around 0.808 percent, the 30-year yield rose 1 basis point to 1.331 percent while the yield on the short-term 2-year traded tad 1 basis point down at 0.561 percent by 10:00GMT.

After GDP growth disappointed expectations yesterday, the smaller fall in employment than expected in the three months to September was something of a relief. But it was a mixed picture with pay growth also coming of the boil, Capital Economics reported.

Nonetheless, at the margin the figures probably reduce the immediate need for the MPC to adjust interest rates before it is clearer how Brexit will pan out, the report added.

The 58,000 fall in employment was much smaller than the consensus forecast of a 102,000 fall. And due to a larger fall in participation, the unemployment rate actually nudged down from 3.9 percent to 3.8 percent, its lowest since 1974. Further, the annual employment growth ticked up from 0.9 percent in August to 1.0 percent, Capital Economics further noted in the report.

Meanwhile, the FTSE 100 remained tad 0.27 percent up at 7,348.85 by 10:05GMT.