FOCUS SHIFTS TO BOE

Gilts have traded sideways for most of the session following the early morning sell-off, but have started to gain ground since 1400 London time. Stocks have pushed higher through the day and cable has made an incremental advance.

• The Dec-20 gilt future trades at 136.22, 19 ticks off the day's low.
• Cash yields are 1-2bp higher across the curve with the shorter end underperforming on the day. Last yields: 2-year -0.081%, 5-year -0.079%, 10-year 0.2085%, 30-year 0.7628%.
• The short sterling futures strips (whites>>blues) is 0.5-2.0 ticks lower with reds/greens slightly underperforming.
• The DMO earlier sold GBP2.75bn of the 1.25% Jul-27 gilt and GBP1.75bn of the 1.75% Sep-37 gilt. A further GBP117.5mn of the former and GBP437.5mn of the latter were taken up through the PAOF.
• Data published earlier this morning showed an increase in the unemployment rate to 4.1% in July from 3.9% the previous month, while the employment change (on a 3m/3m basis) data was not as bad as expected (-12k vs -118k consensus).
• Tomorrow sees the publication of August CPI data. Focus quickly shifts to the Bank of England meeting on Thursday.