UK gilts slump after November CPI tops expectations; October employment report in focus

The UK gilts slumped Tuesday after the country’s consumer price-led inflation index for the month of November topped market expectations. Also, investors remain glued to watch the employment report for the month of October, scheduled for tomorrow, which will provide further direction in the debt market.

The yield on the benchmark 10-year gilts, jumped nearly 2 basis points to 1.22 percent, the super-long 30-year bond yields also surged 2 basis points to 1.80 percent and the yield on the short-term 2-year traded 1 basis point higher at 0.47 percent by 09:50GMT.

Inflation in Britain climbed to the highest level in over five in and a half years in November, remaining above the Bank of England's 2 percent target for the ninth consecutive month, after breaking through the threshold for the first time in three years in March.

According to data released by the Office for National Statistics (ONS) on Tuesday (12 December), inflation, as measured by the Consumer Price Index (CPI), rose 3.1 percent year-on-year last month, compared with the 3 percent growth recorded in October and September.

On a monthly basis, inflation climbed 0.3 percent, after rising 0.1 percent in the previous month, beating analysts' expectations for a 0.2 percent increase.

Meanwhile, core inflation, which excludes volatile items such as energy prices, was unchanged at the 2.7% rate recorded in the previous two months, which was the highest on record since 2011.

Meanwhile, the FTSE 100 traded 0.21 percent higher at 7,469.00 by 09:55 GMT, while at 09:00GMT, the FxWirePro's Hourly Pound Strength Index remained slightly bullish at -97.45 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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