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Here we look at the leading indicators in the world of economics.

for in-depth analysis into commodities, trade, equities and more.

The divergence of swap rates and gilt yields amid market volatility

The recent widening of the (negative) spread between UK swap rates and government bond yields reflects heightened uncertainty and a global sovereign bond sell-off, including gilts, which has pushed yields higher. In contrast, expectations for rate cuts have helped temper upward pressure on swap rates. Currently, the spread between the 10-year SONIA swap rate and the 10-year gilt yield stands at -54bps. While the negative spread reflects financial market volatility, the absence of a similar rise in swap rates is relatively supportive for borrowers.

Manufacturing surge drives strong UK GDP growth in February

UK GDP rose by +0.5% m/m in February, marking the strongest growth in nearly a year and outperforming economists鈥� expectations of a +0.1% increase. The rebound follows flat growth in January and was supported in part by a +2.2% rise in manufacturing output, as exports to the US reached their highest level since late 2022. Whilst the UK economy is on course for a positive first quarter, uncertainty from the rise in US tariffs remain.

Labour market softness likely to encourage BoE to maintain current rate-cutting path

The UK unemployment rate remained unchanged at 4.4% in the three months to February. Private sector wage growth, a key indicator watched by the Bank of England (BoE) for indications of a tight labour market, held steady at 5.9%, staying on course to come in below the BoE鈥檚 6.2% forecast for the first quarter. Markets are now pricing in a rate cut in May, with expectations for two further reductions by the end of the year.

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