A Touch Firmer, BoE Pricing Eases

Gilts look to EGBs and the previously outlined comments from BoE’s Pill, who reiterated his preference for higher for longer interest rates as opposed to risking overtightening,

• Gilt futures +15 ticks, with the bid slowing just ahead of yesterday’s high after an opening downtick was quickly faded.
• Cash Gilts run flat to 1bp richer, bull steepening at the margin.
• BoE-dated OIS eases by 2-5bp, with ~26bp of tightening now showing for next month, while terminal policy rate pricing hovers a little below 5.85%.
• Comments from Karen Ward, chief EMA market strategist at JPMorgan Asset Management and advisor to Chancellor Hunt, suggested that the UK should consider lifting the BoE’s inflation target from 2% once price pressures have been curbed. This failed to attract much market interest.
• Most of the DMO's FQ3 issuance calendar met expectations, although the lack of a new index-linked syndication and explicit mention on 30+ year potential tenders was noted.