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5-15-year yields move to month's lows

GILTS
  • With global recessionary concerns on the rise, 5-15-year yields have moved to the lows of the month.
  • However, front-end yields have not fallen back to anywhere near the levels seen at the beginning of the month and 2-year yields remain over 20bp above those levels.
  • Markets continue to look for a relatively aggressive response from the Bank of England, with 45bp priced for each of the next two meetings with a further combined 66bp priced for the final two meetings of the year, although after then, no more hikes are fully priced with the SONIA curve starting to invert after March.
  • In the short-term tomorrow's FOMC meeting is likely to be the biggest driver of the gilt curve.
  • Markets are watching the race for the next PM, but this is not really market moving at present.

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