Spanish bailout trumps upbeat UK jobs data

It was not exactly research in the scientific sense but an internet dating firm (and we're not talking carbon here) asked its members at what age they no longer considered themselves "young". Almost half the respondents said that at 28 they left youth behind and became grown up. The survey also asked what were the signs of this metamorphosis. One of the most popular indicators was no longer watching X Factor. Another was preferring home-prepared food to buckets of deep-fried chicken. So there it is. Maturity is inversely proportional to one's tolerance for anodyne pap.

It is intriguing, then, to see how the (presumed) grown-ups who drive financial markets are still happy to soak up reassurances from the European Central Bank, the International Monetary Fund and the European Commission that Spain and the euro will be salvaged by their action. As with X Factor and Radio 1, the output is pretty much the same every week yet the repetitious Spanish bailout story still trumped a tangible improvement in the UK employment situation.

Figures released yesterday morning showed another fall in the number of jobseekers, the lowest unemployment rate for a year and a record number of people in work. There was nothing not to like in the figures, all of which exceeded investors' expectations. But they were not enough. The minutes of the October Monetary Policy Committee meeting, released at the same time as the employment data, failed to rule out the possibility of a further round of asset purchases by the Bank of England: "There were some differences of view between members about the outlook and the likelihood that further policy easing would be required." The wording fell well short of a promise that the MPC would go for more asset purchases next month but investors will not relax until they hear for sure in three weeks' time.

So the long-running Spanish bailout story trumped the UK employment data and the pound was unable to make headway against the euro. Sterling was similarly static against the US dollar and the Swiss franc.  It strengthened by three quarters of a yen and fell back against the other major currencies. For a second day the South African rand put in the best performance as investors' attention swung from labour disputes to the longer-term outlook.

Figures announced earlier today showed Australian business confidence steady at -2 and China's economy expanding by 2.2% in the third quarter. Chinese gross domestic product (GDP) grew by 7.4% in the year to September, with industrial production up by 9.2% and retail sales 14.2% higher. Sterling faces another heads-it-loses-tails-it-doesn't-win test this morning with the September retail sales figures. The prediction is for a monthly increase of 0.5% but the forecasters have not been particularly accurate with this indicator in recent months. This afternoon come US weekly jobless claims, Canadian wholesale sales and the Philadelphia Fed's manufacturing survey.

Apart from UK retail sales the one to watch is Spain's auction of ten-year government bonds this morning. It cannot be a coincidence that the sale is timed to take place just as EU heads of government gather in Brussels. The Madrid government obviously expects it to go well and, as long as does, the euro could be expected to benefit.