Economic indicators have painted a mixed picture for a couple of months. For example, the composite PMI pointed to a slight pick-up in GDP growth at the start of the third quarter, to perhaps 0.4%q/q. Yet, healthy job creation and a further fall in the already very low unemployment rate were not enough to give wage growth a significant boost. Real wages have now fallen for four consecutive months. But with 10-year gilt yields hovering around 1.1%, financial markets do not seem to be pricing in a tightening in monetary policy or an improvement in growth any time soon.
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