FX.co ★ UK Gilt Yield Trim Gains on Weak US Jobs Data

UK 10-year gilt yields reversed early gains to slip below 2.8% after weaker-than-expected US employment data led investors to scale back expectations for additional Federal Reserve rate hikes. The US economy added only 57,000 jobs last month, far short of forecasts, while the unemployment rate unexpectedly fell to 4.2% as many people exited the labor force. Markets also digested comments from central bankers at the ECB’s Sintra Forum. Bank of England Governor Andrew Bailey struck a dovish note, citing signs of a slowing UK economy but emphasizing that persistent inflation pressures still preclude near-term rate cuts. At the same event, Fed Chair Kevin Warsh noted that inflation expectations have eased in recent weeks, while reiterating the Fed’s resolve to bring inflation back to its 2% target. Separately, improving prospects for indirect US-Iran talks—amid expectations that Qatar will soon schedule the next round—helped push oil prices lower, as shipping through the Strait of Hormuz continued with minimal disruption.