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GILTS
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)
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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