December rate hike in US a ‘live possibility’

Fed Chair Janet Yellen says an interest rate hike in December is a ‘live possibility’ if the ‘incoming information’ points to a continuing improvement in the labour market (which increases the focus on tomorrow’s employment report in the US)

US bond yields rise further: 2-year yields increase by around 5bps to a new cycle high of 0.83%, while 10-year yields are now trading close to 2.25%

The dollar is generally on the front foot, which sees EUR/$ fall to around $1.0850

The services PMI in the UK rebounded in October, rising to 54.9 from 53.3 in September. The follows a rebound in the manufacturing PMI reported at the start of this week

Sterling has gained further ground against the euro and is now trading at around 70.5 p

The Bank of England’s MPC is likely to keep interest rates unchanged today but may indicate that a first increase could occur earlier than the market currently expects (which is not until  the fourth quarter of 2016)