MNI China Daily Summary: Wednesday, July 3

MNI BRIEF:BOJ Q1 Output Gap Hits 16th Negative Reading In Row

MNI: PBOC Sets Yuan Parity Higher At 7.1312 Weds; -0.34% Y/Y

MNI: PBOC Net Drains CNY248 Bln Via OMO Weds; Rates Unchanged

CHINA PBOC CONDUCTS CNY2 BILLION VIA 7-DAY REVERSE REPOS WEDS

CHINA SETS YUAN CENTRAL PARITY AT 7.1312 WEDS VS 7.1291

EZ/UK Bond Supply Calendar: Spain, France Auction on Thursday

PPI a Tenth Softer than Exp; Further NEIG HICP Disinflation to Come?

MNI: EUROZONE MAY PPI -0.2% M/M, -4.2% Y/Y

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

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2-/5-/10-Year Fly In Middle Of Multi-Month Range, What Next?

GILTS
Bank Of England (BOE) Market NewsHomepageBond Market NewsBulletMarketsFixed Income Bullets

The 2-/5-/10-Year gilt butterfly has moved away from mid-June highs around -30bp, last printing around -40bp.

  • Increased prospects of near-term BoE rate cuts and the immediate gilt issuance profile could promote further belly richening over the next couple of weeks.
  • However, those inputs could soon become limiting factors for the fly.
  • The mid-July round of 5- & 7-Year gilt issuance and some potential short-term limitations to the degree of dovish BoE repricing may mean that the structure struggles to test/break multi-months lows of -50bp in the near-term.

Fig. 1: UK 2-/5-/10-Year Butterfly (bp)

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The 2-/5-/10-Year gilt butterfly has moved away from mid-June highs around -30bp, last printing around -40bp.

  • Increased prospects of near-term BoE rate cuts and the immediate gilt issuance profile could promote further belly richening over the next couple of weeks.
  • However, those inputs could soon become limiting factors for the fly.
  • The mid-July round of 5- & 7-Year gilt issuance and some potential short-term limitations to the degree of dovish BoE repricing may mean that the structure struggles to test/break multi-months lows of -50bp in the near-term.

Fig. 1: UK 2-/5-/10-Year Butterfly (bp)

Keep reading...Show less