. On the other hand, the Yen weakened against most of its European rivals as policy divergence weighs on the Japanese currency.The UK Office for National Statistics revealed that the number of those claiming jobless benefits contracted by 9.6K in May from its previous measure of 46.7 K. Moreover, the unemployment rate slightly decreased to 3.8% vs the 4% expected in the 3 months prior to April, while average earnings, including and excluding bonuses, accelerated during the same period.
That being said, Governor Andrew Bailey stated on Tuesday that “The labor hoarding is going on because of the tight market, and firms are reluctant to make people redundant.” Regarding inflation, “Food inflation is taking a lot longer to come down than we expected,” and he expects inflation to come down but that it may take longer than anticipated.
Regarding the next meetings: WIRP suggests a 25 bp hike is fully priced in, with nearly 15% odds of a larger 50 bps move. Hikes are priced in for August, September, and November, which would see the policy rate peak near 5.5%. In that sense, the hawkish bets were reflected in rising UK yields. The 10-year bond yield rises to 4.47%, while the 2-year yield stands at 4.93% and the 5-year yield at 4.56%, all three seeing increases of from 2% to 4%.