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Market Overview: Employment report turns heat up on MPC

1236: ‘The very positive labour report has significantly turned the heat up on the BoE MPC [...] This just highlights the problem with their forward guidance, they have conditioned on a variable that fails to fully capture economic slack, lags output growth and is influenced by demographics, but now they don’t even trust that the ONS is measuring it correctly!,’ writes Daniel Vernazza, Economist at Unicredit.

1235: ‘Moreover, while the headline unemployment rate is a rolling 3-month average, the latest 1-month unemployment rate estimates (which are not full National Statistics though, and can be very volatile) show 7.1 per cent in September and 7.0 per cent in October. So, even with a notable rise in November, the 3-month unemployment rate could plausibly fall further next month,’ Bank of America-Merrill Lynch economists Nick Bate and Laurence Boone are telling clients.

1230: Centrica is leading gains on the top flight index after announcing the sale of 420m pounds of assets in the US to Blackstone Group. The proceeds will be channeled into an extension of its share buy-back programme next year.

1103: Yields on 10-year Gilts are rising by four basis points to 2.91 per cent following today’s employment report. The session high was hit at 2.92 per cent.

1100: The CBI’s distributive trades survey for December reported sales balance increased to 34 from a reading of 1 in the month before (consensus: 10).

0930: The unemployment rate in the UK dropped to 7.4 per cent for the three months ended in October, versus 7.6 per cent in the month before (consensus: 7.6 per cent). The MPC voted unanimously to hold their policy settings unchanged at their meeting on December 4th an 5th, as expected, according to the minutes of the same.

0900: The IFO Institute’s German business confidence index for the month of December edged higher, to hit 109.5, versus the previous month’s reading of 109.3. The expectations component moved up to 107.4 from 106.5.

0851: Shares are recovering some of the ground which they ceded yesterday. That comes as all eyes are, understandably enough, on this evening’s FOMC decision Stateside. Also of import, at 09:30 the minutes of the November MPC meeting are released. Marks&Spencer is leading fallers in the early going after being downgraded by analysts at UBS to ‘hold’ from ‘buy.’ Shares of Morrison are also quite weak on Wednesday morning and trading at technical support. FTSE 100 up 21 to 6,507.

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