Bond yields jump

Sterling has gained some ground against both the euro and the dollar, helped by the Bank of England’s latest monetary policy statement, and is trading at around 85.5p and just over $1.37 respectively this morning, while the euro is still hovering just above $1.17 against the US currency

A Bank of England-inspired move up in bond yields saw UK and US 10-year yields end the day about 12bps higher at 0.91% and 1.43% respectively, while equivalent German yields rose by about 6bps to -0.26% (both UK and German have nudged higher again this morning)

The Bank of England left both interest rates and the size of its bond purchases unchanged following yesterday’s meeting, but said the case for a modest tightening of policy had strengthened in the face of what it said may be more persistent cost and prices pressures. This prompted the market to price in a 15bps increase in the Bank Rate (from its current level of 0.1% to 0.25%) by February next year

The pace of economic activity in the Euro area, UK and US moderated in September judging by the latest flash PMIs, all of which dipped this month from August

Data due today include new home sales in the US