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GILT SUMMARY

Gilts Hit Turbulence On BoE Announcement

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Spanish PMI came in well above expectations in April, with a services reading of 54.6 (50.0 exp., 48.1 prior) and composite of 55.2 (52.2 exp., 50.1 prior). This was the strongest services expansion since the end of 2019, and came as "encouraging demand developments and positive projections for activity helped to support growth" per the IHS Markit release

  • Activity: Sales volumes rose by the most since Aug 2019, but new business "predominantly driven by the domestic market", and new export business continued to decline.
  • Employment: Firms took on additional staff for the first time since Feb 2020 - growth also linked to planned re-openings and the return of furloughed staff.
  • Prices: Higher staffing levels led to rising labor costs, while "suppliers generally increasing their charges amid widespread product shortages, plus rising costs for transportation, overall operating expenses" rose the most since Aug 2008. Output charges rose for the first time for over a year (albeit only modestly).
  • Outlook: "Confidence about the future hit its highest level since early 2004" amid vaccinations / economic reopening.