UK gilts flat after November CPI remains unchanged; retail sales in focus

The United Kingdom’s gilts remained flat during European trading hours Wednesday after the country’s consumer price inflation (CPI) for the month of November rose, albeit remaining unchanged from that in October, also cheering market expectations.

Investors will now eye Britain’s retail sales for the similar period, scheduled to be released on December 19 by 09:30GMT for further direction into the debt market.

The yield on the benchmark 10-year gilts, hovered around 0.760 percent, the 30-year yield remained flat at 1.277 percent and the yield on the short-term 2-year slipped 1 basis point to 0.524 percent by 09:55GMT.

November’s inflation figures support the view that the MPC will sit tight at its meeting tomorrow and keep interest rates on hold throughout 2020. After all, at 1.5 percent, the unchanged rate of inflation was a little above the projection made by the Bank of England in November and the consensus forecast of 1.4 percent, Capital Economics reported.

The core measure (excluding food, alcohol, tobacco and energy) held steady at 1.7 percent too. The breakdown showed that price rises for concert tickets and package holidays put some upward pressure on CPI inflation. But these effects were offset by last month’s tobacco duty rise which was smaller than in November 2018, the report added.

Meanwhile, the FTSE 100 remained nearly flat at 7,537.35 by 10:05GMT.