Adjusting To Broader Themes, Jan-27 Supply Eyed

Gilts adjust to the modest downticks in global equity markets and light richening in U.S. Tsys observed since yesterday’s close as Wednesday trade gets underway, leaving the contract ~20 ticks firmer on the day after some early two-way gyrations followed a small gap higher. Wider cash trade sees some light bull flattening with the major benchmarks sitting little changed to 2bp richer.

• Local headline flow sees continued political jostling at the fore, while think tanks continue to opine on monetary-fiscal policy interplay.
• The domestic docket is headlined by the DMO returning to the market to sell GBP3.75bln of the 4.125% Jan-27 Gilt. That means that wider cues will likely set the general tone for the space today, while auction-related dynamics are likely to provide a shorter-term impulse (unless we get a particularly strong or weak round of demand).