UK DATA: Services PMI revised down; wage increases and passthrough still concern
Feb-04 09:35
- A downward revision to the services PMI by 0.3 points, but the areas of concern for the doves are still there in the forms of payroll costs pushing up output prices by the most since August. And improving sentiment also flagged. From the press release:
- "Higher payroll costs were by far the most commonly cited factor pushing up input prices in January. Latest data signalled a sharp rate of overall cost inflation, albeit slightly lower than December's seven-month high. Greater technology costs and raw material prices (especially food and metals) were also noted at the start of the year."
- "Efforts to protect margins from rising business costs led to another robust and accelerated increase in prices charged by UK private sector companies. The latest rise in output charges was the steepest since August 2025 and remained well above its long-run average."
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MNI: UK BOE NOV MORTGAGE APPROVALS 64,530
Jan-05 09:30
- MNI: UK BOE NOV MORTGAGE APPROVALS 64,530
- UK BOE NOV SECURED LENDING GBP4.49 BLN
- UK BOE NOV CONSUMER CREDIT GBP2.08 BLN
MNI: UK NOV M4 MONEY SUPPLY +0.8% M/M, +4.3% Y/Y
Jan-05 09:30
- MNI: UK NOV M4 MONEY SUPPLY +0.8% M/M, +4.3% Y/Y
BONDS: Gilt/Bunds Tightens, Dec Lows Unchallenged
Jan-05 09:26
Gilts also outperform Bunds, with the 10-Year spread narrowing by ~1bp to 162.5bp this morning.
- Fiscal divergence, with Germany’s plans for fiscal loosening and the UK’s (backloaded) fiscal tightening outlined in the November Budget, coupled with the likelihood of further BoE easing, keeps focus on the downside in the spread in the immediate term.
- December’s closing low 161.09bp presents the next downside target.
- A reminder that dips below 160bp were quickly faded last month.
- A more meaningful break below 160bp would expose the July ’24 closing low (156.93bp).
- Note that any re-intensification of lingering UK fiscal risks could quickly alter the balance in the spread.
Fig. 1: UK/Germany 10-Year Yield Spread (bp)
