FX.co ★ UK 10-Year Gilt Yield Rises to 6-Week High

The yield on the UK's 10-year government bonds, known as gilts, surged to 4.668%, marking its highest level in over six weeks, following the release of mixed labor market data. The Office for National Statistics (ONS) reported a continued decline in the number of employees on payrolls, signaling ongoing fragility within the labor market. However, revisions of past tax data indicate that recent decreases were not as pronounced as initially believed. The unemployment rate nudged up to 4.7%, while wage growth, excluding bonuses, remained robust but showed signs of deceleration. Job vacancies persisted in their three-year downward trend. In general, these figures suggest a cooling of the labor market, albeit with continuous wage pressures. This development comes just a day after June's inflation rates unexpectedly rose to 3.6%, surpassing the anticipated 3.4%. With this combination of persistent inflation and a softening job market, the Bank of England faces a challenging scenario. While the easing in wage growth could argue for interest rate cuts, the stubborn inflation levels might delay such measures. Traders have slightly moderated their expectations, although they continue to anticipate two more rate cuts by 2025.