UK 10-year gilt yields edged back toward 4.8%, rebounding from two-month lows in step with an unexpected rise in US Treasury yields. The move followed the latest JOLTS report, which showed job openings at a two-year high, and came ahead of another anticipated strong US non-farm payrolls print for June, both reinforcing expectations that the Federal Reserve will raise interest rates this year.
In the UK, investors weighed the increasing likelihood that Energy Secretary Ed Miliband could become the next Chancellor, rather than centrist Wes Streeting. At the same time, concerns over the fiscal stance under Andy Burnham, the frontrunner to succeed as Prime Minister, eased after his pledge to maintain fiscal discipline.
Attention also remained on the ECB’s Sintra Forum for further economic and policy signals. Bank of England Governor Andrew Bailey reiterated that the BoE would not rush to react to higher oil prices, noting that inflation still appears on course to return to the 2% target, though later than policymakers would prefer.
