UK 10-year gilt yields slipped below 4.5%, their lowest level since January 22, as investors turned their focus to the closely watched US January jobs report. While nonfarm payrolls are expected to show a modest rebound, uncertainty remains after several US officials, including White House economic adviser Kevin Hassett, cautioned that hiring could slow in the coming months.
On the domestic front, easing political tensions also underpinned market sentiment. Prime Minister Keir Starmer secured support from senior cabinet members and across the Labour Party following the resignation of his chief of staff, Morgan McSweeney, amid the controversy involving Lord Peter Mandelson.
At the same time, markets increased their expectations for additional interest rate cuts by the Bank of England. Although the central bank left its benchmark rate unchanged at 3.75% in a split decision, policymakers struck a more dovish tone, signaling that inflation is likely to drift back toward the 2% target from April.
