UK gilts surge following mixed November labour market report; eyes on BoE Governor Carney’s speech

The United Kingdom’s gilts surged during European trading hours Tuesday following mixed labour market report for the month of November, while investors still eye the Bank of England (BoE) Governor Mark Carney’s speech, scheduled to be delivered today by 19:15GMT for further direction into the debt market.

The yield on the benchmark 10-year gilts, plunged 5 basis points to 0.774 percent, the 30-year yield slumped nearly 3-1/2 basis points to 1.284 percent and the yield on the short-term 2-year plummeted nearly 5-1/2 basis points to 0.551 percent by 11:50GMT.

The larger-than-expected rise in employment in October suggests the labour market is not getting any worse and may have even started to turnaround. That will probably allow the Monetary Policy Committee to hold off cutting interest rates at Thursday’s meeting, Capital Economics reported.

Employment rose by 24,000 in the three months to October, which was much better than expected (consensus -14,000, CE +15,000) and kept annual employment growth at 1.0 percent. The strength of employment meant the unemployment rate held steady at 3.8 percent as opposed to rising to 3.9 percent as the consensus suspected, the report added.

And while headline annual pay growth eased from 3.7 percent in September to 3.2 percent, underlying pay growth excluding bonuses held up better, only easing from 3.6 percent to 3.5 percent.

Meanwhile, the FTSE 100 remained flat at 7,514.95 by 11:55GMT.