UK gilts gain on disappointment in August employment report; September CPI in focus

The United Kingdom’s gilts jumped during European trading hours Tuesday after the country’s employment report for the month of August disappointed market sentiments, while eyes still remain on the consumer price inflation (CPI) for the month of September, scheduled to be released tomorrow for further insight into the debt market.

The yield on the benchmark 10-year gilts, slipped nearly 1 basis point to 0.632 percent, the 30-year yield also edged 1 basis point down to 1.102 percent while the yield on the short-term 2-year remained steady at 0.503 percent by 11:05GMT.

The latest UK labour market provided further evidence that the ongoing uncertainty around the UK’s withdrawal from the EU, along with signs of a slowdown in world economy, were impacting on hiring activity in the UK, Lloyds Bank reported.

The level of employment fell by 56k in the three months to August, against market expectations of a small rise (consensus: +26k, Lloyds: +20k) but in keeping with the broad slowdown seen in hiring activity in recent months, the report added.

On the latter, this trend continued in the latest report with the number of vacancies dropping to a two-year low. Unsurprisingly, the decline in employment meant that unemployment also increased, rising by 22k and nudging the unemployment rate back up to 3.9 percent, Lloyds Bank further noted in the report.

Meanwhile, the FTSE 100 remained tad -0.39 percent down at 7,185.25 by 11:10GMT.