UK DATA: DMP: Employment Falls More Significantly
The big story from the DMP data is how soft the employment data looks, both on the realised and expected measures. This will give confidence to the doves on the MPC that the labour market is indeed weakening. The wage growth data was not too surprising (and as we noted in our preview the 3-month average expected number increased a tenth - but the single month print was softer).
- Employment growth was soft: both realised and expected. Realised employment growth was -1.8%Y/Y on the single month measure in November. This is the first print below -0.6% since July 2021. Expected employment growth was -0.7%Y/Y on the single month print, bringing the 3-month average down a tenth to -0.2%Y/Y (after last month rounding to a negative number for the first time since December 2020).
- Single month expected wage growth fell to 3.64%Y/Y after two consecutive prints rounding to 3.8%. As we noted in our preview, this was still enough for the 3-month average to tick up to 3.8%Y/Y (versus 3.5% for 2026 for preliminary Agent data). But on the margin this is still an encouraging development.
- Realised wage growth on the single month measure rebounded back to 4.59%Y/Y in Nov (it had been 4.24% in Oct after 4 consecutive prints that rounded to 4.6-4.7%). The rounded 3-month average remained at 4.5%.
- Mean expected price growth was back at 3.5% on the single month print (same as 3-months ago but after two 3.7% prints). The 3-month average was 3.7% and means we have seen 7 consecutive months of 3.6-3.7% prints.
- Realised price growth was 3.5% on the single month print - which makes the 4.1% seen in September seem more of an outlier. 8/10 of the last single month figures have rounded to 3.4-3.6%Y/Y.
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US TSY FUTURES: TU Blocked
Latest block trade lodged at 09:41:31 London/04:41:31 NY:
- TUZ5 13,210 lots blocked at 104-05.875, looks like a buyer. Initial block of the same volume at 104-05.75 appears to have been cancelled.
- DV01 ~$500K.
SPAIN T-BILL AUCTION RESULTS: 6/12-month letras
| Type | 6-month letras | 12-month letras |
| Maturity | May 8, 2026 | Nov 6, 2026 |
| Amount | E1.428bln | E3.6bln |
| Target | E4.5-5.5bln | Shared |
| Previous | E1.812bln | E3.82bln |
| Avg yield | 1.944% | 1.990% |
| Previous | 1.937% | 2.006% |
| Bid-to-cover | 1.98x | 1.5x |
| Previous | 2.07x | 1.58x |
| Previous date | Oct 07, 2025 | Oct 07, 2025 |
UK FISCAL: Reeves Prepares Ground For Tax Hikes; Voters Already Expecting Them
Chancellor of the Exchequer Rachel Reeves' speech earlier this morning, in which she talked about the UK's economic situation with regard to the 26 Nov budget, but not about the measures the budget would contain, was somewhat oddly timed. There has been significant speculation in recent weeks that Reeves intends to break the Labour manifesto promise of not raising income tax, VAT or National Insurance contributions.
- Given the language used in her speech (see UK FISCAL: Reeves doesn't confirm manifesto pledges to taxes or working people, UK FISCAL: Reeves refusing to rule out working people tax increases), it is clear that the chancellor was attempting to prepare the ground for tax rises in the budget statement.
- However, by refusing to confirm or deny that the manifesto pledge will be breached, the main impact of the address will be to set up 3+ weeks of more media speculation, and ensure that headlines around looming tax hikes and 'Labour broken manifesto promises' remain prominent in the UK news cycle rather than only coming back to the fore in the direct run-up to the budget.
- Latest polling from YouGov shows the public is already overwhelmingly expectant of a manifesto pledge-breaking income tax rise. Sixty-four per cent of respondents believe Reeves either definitely or probably will raise the basic rate of income tax, with 44% of supporters of the right-wing populist Reform UK saying they 'definitely' think Reeves will enact the first increase to the basic rate of income tax since 1975.
Chart 1. Opinion Poll: "From what you have seen and heard, do you believe Rachel Reeves will or will not raise the basic rate of income tax in next month's budget?", %, Overall and by Party Affiliation
Source: YouGov, MNI. Fieldwork: 27 Oct. 5,287 respondents.
