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LONDON - British government bond yields rose on Wednesday as finance minister Jeremy Hunt pushed back his upcoming fiscal statement into November, a complication for investors and the Bank of England as they try to judge the inflation outlook.
The fiscal update had been due on Monday but in a televised announcement, Hunt pushed it back to Nov. 17 - meaning the BoE will not be able to incorporate it into its economic forecasts, due to be published on Nov. 3 alongside its interest rate decision.
Long-dated gilt yields were up 8 basis points on the day as of 1213 GMT, while inflation-linked bonds saw heavier losses, with yields up mostly around 17 bps on the day.
Modest demand at an auction of 2029 gilts underlined the sense of listlessness in the market.
Long-dated British debt underperformed equivalent French and German bonds.
Antoine Bouvet, rates strategist at ING, said the delay was "bad news for gilts".
"Delaying the budget statement until after the BoE meeting won't force the Bank to take it into account in its economic forecast and push back more forcefully against hikes priced on the curve," he said.
Rate futures pointed to a roughly 35% chance of an outsized 100 bps rate hike by the BoE on Nov. 3 - compared with 30% earlier in the week. There was a 65% chance of a 75 bps hike as of 1213 GMT.
The two-year gilt yield, sensitive to changes in interest rate expectations, rose 8 bps on the day.
Hunt's statement next month is likely to have a material impact on the outlook for gilt issuance in the months and years ahead.
The plan is expected to set out how the government will plug a budget shortfall of as much as 40 billion pounds ($46 billion) - although the recent decline in government borrowing costs from the peaks hit after the previous Sept. 23 economic plan has already reduced that gap.
Unlike Truss's plan last month, it will be fully audited by Britain's fiscal watchdog.
Earlier on Monday, Britain's sale of conventional government bonds due in 2029 on Wednesday produced the weakest demand at an auction since March.
The Debt Management Office (DMO) said it received bids worth 1.96 times the 3.5 billion pounds offered for the 0.5% 2029 gilt - the lowest such ratio since March 2.
(Reporting by Andy Bruce; Editing by Toby Chopra)