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GILTS: A Little Firmer, Gilt/Bund Spread Eyed After Fresh Cycle High

GILTS
CEEMEABulletUKMarketsFixed Income Bullets

Gilts rally a little on the back of the previously covered RTRS source report that flagged the potential for CNY devaluation from the PBoC.

  • Futures as high as 95.38 before fading back to 95.30.
  • A reminder that Tuesday saw the contract break support at 95.49 and 95.17.
  • Initial support now located at yesterday’s low (95.13). Bears ultimately need to break key support at the Nov 18 low (93.40) to reignite downside momentum.
  • Yields ~1bp lower across the curve.
  • 10+-Year benchmarks hit the highest levels of December yesterday.
  • 10s and 50s closed above their 50-DMAs.
  • Spread to Bunds 219.5bp after closing pretty much bang on the key 220bp level yesterday, a fresh cycle closing high.
  • Fresh extension higher in the spread would target the ’22 mini-Budget high at 227.5bp.
  • SONIA futures flat to +1.0.
  • GBP4bln of 4.25% Jul-34 gilt supply due this morning, but little else on the UK calendar.
  • That will leave focus on cross-market cues and the U.S. CPI data.
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Gilts rally a little on the back of the previously covered RTRS source report that flagged the potential for CNY devaluation from the PBoC.

  • Futures as high as 95.38 before fading back to 95.30.
  • A reminder that Tuesday saw the contract break support at 95.49 and 95.17.
  • Initial support now located at yesterday’s low (95.13). Bears ultimately need to break key support at the Nov 18 low (93.40) to reignite downside momentum.
  • Yields ~1bp lower across the curve.
  • 10+-Year benchmarks hit the highest levels of December yesterday.
  • 10s and 50s closed above their 50-DMAs.
  • Spread to Bunds 219.5bp after closing pretty much bang on the key 220bp level yesterday, a fresh cycle closing high.
  • Fresh extension higher in the spread would target the ’22 mini-Budget high at 227.5bp.
  • SONIA futures flat to +1.0.
  • GBP4bln of 4.25% Jul-34 gilt supply due this morning, but little else on the UK calendar.
  • That will leave focus on cross-market cues and the U.S. CPI data.