Bonds: Gilts brush off employment report

These were the movements in some of the most widely-followed 10-year sovereign bond yields:

US: 1.74% (0bp)

UK: 1.08% (0bp)
Germany: 0.03% (-1bp)
France: 0.32% (+1bp)
Italy: 1.39% (+1bp)
Spain: 1.11% (+1bp)
Portugal: 3.20% (-5bp)
Japan: -0.06% (-1bp)
Greece: 8.44% (-1bp)

Trading in government bond markets was very subdued on Wednesday as traders waited on the results of the European Central Bank's policy meeting the next day.

Gilts ended the day largely unchanged, apparently brushing off figures from ONS which, according to Barclays, revealed a "resilient" UK labour market during the month of August.

Nonetheless, as economists at the investment bank said: "It is too early to see significant impact from the Brexit vote on the UK labour market [...] We expect Brexit to push up unemployment only gradually, likely at the turn of the year, and prevent upward wage growth pressures from building, thus forcing households to be more prudent and reduce private consumption by end-2017."

Elsewhere, the minutes of the Fed's Beige Book, which were published late in the US session, indicated a "modest or moderate pace of expansion" in most Fed districts.

There was also a bit of Fed-speak out late in the evening, with the president of the Federal Reserve bank of Dallas telling an audience it was "likely" that US inflation was firming.

For his part, NY Fed chair William Dudley reportedly stressed the need for the US central bank to move at a "gradual, cautious" pace.

Overnight, third quarter Chinese GDP data printed at 6.7%, just as expected, although that was suspiciously unchanged from the pace seen over the prior two quarters, according to multiple analysts.

In terms of broad trends, markets' focus appeared to continue to be on possible signs that the current cycle of monetary easing might be turning, with traders trying to assess or predict the exact pace at which that might happen.

Against that backdrop, in a lecture delivered at CASS Business School, Bank of England chief economist Andrew Haldane published the results of a study quantifying the impact of quantitative easing thus far.

Further afield, the Bank of Canada kept its main policy rate unchanged, as expected, but lowered its forecasts for growth, while Brazil's monetary authority cut its base rate by 25 basis points to 14.0%, the first reduction in four years.

Economists had been roughly divided about whether the Brazilian central bank would cut rates by 25 or 50 basis points.