The labor market is showing signs of weakening, with JPMorgan betting on the Bank of England cutting interest rates in December.

The weakening UK labor market has prompted more economists to bet on the Bank of England cutting interest rates in December, a prediction that has led to the best single day performance for UK 10-year government bonds since June. Morgan Stanley economist Allan Monks now expects the Bank of England to cut rates in December, rather than the previously predicted February next year. Goldman Sachs, ING Group, and Nomura Holdings also hold similar views. Market traders believe there is an 85% chance of a rate cut before the end of the year, driving the yield on UK 10-year government bonds down to 4.37%, close to the lowest level this year. The Bank of England has been slower to act on rate cuts compared to other major central banks, as stubborn inflation and sticky wage data have made the path to rate cuts more complicated. However, in recent weeks, signs indicate that both of these negative factors are easing, boosting expectations in the market for a rate cut before Christmas. Morgan Stanley economist Monks wrote in a report, "The next two inflation data releases could still surprise and cast doubt on the timing of a rate cut, but this change must be significant enough to offset the impact of the September data and overshadow the latest labor market news."