Gilts the underperformers as TSC meeting enters final phase (1/2)

We expect most of the market-moving rhetoric to have occurred so far from the testimony by Bailey, Pill, Mann and Saunders to the Treasury Select Committee.

Highlights:

• Bailey seemed to suggest we may have enough data in the next six weeks to make a more informed decision - and together with Pill, continued to suggest December was still in play. The discussion was very focused on the labour market - and the reason to wait for December was official data on the end of the furlough scheme. This is something we argued the Bank should wait for going into the November decision (but thought they might not given the inter-meeting communications).
• We have labour market data tomorrow and then another print ahead of the December MPC meeting. Bailey pointed to both the HMRC payroll data (which we get tomorrow) but also aggregate hours worked (which we get more details on in next month's release).
• This also suggests that activity data (that had been talked up a lot at the MPR presser) may be a bit less important than previously expected, with labour market taking on even more importance. Given the Bank's previous communication, we will continue to watch activity data closely, however.