UK gilts surge ahead of BoE MPC Treasury Committee Hearings, November PMIs

The United Kingdom’s gilts surged during European trading hours Wednesday as investors remained side-lined amid a muted trading session that witnessed data of little economic significance.

However, investors’ attention might turn towards the Bank of England’s (BoE) Monetary Policy Committee (MPC) Treasury Committee Hearings, due on November 21 and the country’s manufacturing and services PMIs for the month of November, both due to be released on the following day for further direction into the debt market.

The yield on the benchmark 10-year gilts, plunged nearly 4-1/2 basis points to 0.692 percent, the 30-year yield slumped 3-1/2 basis points to 1.240 percent and the yield on the short-term 2-year also traded nearly 4-1/2 basis points down at 0.531 percent by 10:40GMT.

While yesterday evening’s televised debate between PM Boris Johnson and Labour leader Jeremy Corbyn predictably provided no further clarity on the election party platforms of the two main parties, politics will certainly continue to dominate the news flow. Data-wise, however, today will bring the previously delayed estimate of unit labour cost growth in Q2, Daiwa Capital Markets reported.

Given weak economic growth but a pickup in wage growth and still-positive employment growth, expect an acceleration in unit labour costs to suggest that domestically generated price pressures increased in the second quarter. Of course, labour market momentum in Q3 has shifted into reverse and unit labour cost growth also likely eased last quarter too, the report added.

Meanwhile, the FTSE 100 surged a tad over 1 percent to 7,387.27 by 10:45GMT.