MNI: PBOC Net Injects CNY37.3 Bln via OMO Wednesday

MNI: PBOC Sets Yuan Parity Lower At 7.1843 Weds; -1.22% Y/Y

MNI BRIEF: Japan Nov CGPI Rises 3.7% Y/Y, Import Prices Drop

MNI BRIEF: Brazil Not Even Close To Fiscal Dominance - David

CORRECTED-MNI BRIEF: Brazil Inflation Rises To 4.87% In Nov

MNI China Daily Summary: Tuesday, December 10

MNI: JAPAN NOV CORP GOODS PRICE INDEX +3.7% Y/Y; OCT REV +3.6%

MNI: USDA: 2024/2025 CORN PRODUCTION EST 15.14B BSL

EZ/UK T-Bill Calendar: 12-Month BOT Auction on Wednesday

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

Are we approaching r* - and will the BOE slow down?

GILTS
  • Gilts are outperforming Bunds and Treasuries this morning. Outside of the 2 1/2 hours following last week's MPC meeting, 10-year gilt yields are below 1.90% for the first time in May.
  • There is continued focus on politics ahead of the Queen's Speech today (which will actually be delivered by Prince Charles). Expectations are low on further support for helping households with the cost of living crisis so there is likely to be more focus on the Northern Ireland protocol. For more on that see the earlier comment from our political risk team here.
  • Yesterday external MPC member Saunders speech contained some interesting comments. He said that part of the reason he favoured 50bp rate hikes was that he was attempting to get Bank Rate back to neutral as quickly as possible (although he never considered a 75bp hike). He said that the danger of the BOE losing its inflation-fighting credibility outweighed his concerns about growth while rates were at an accommodative level. However, he also references estimates of the neutral rate being between 1.25-2.50%. With Bank Rate at 1.00%, that means to get to the lower bound of this range only one more 25bp hike would be required. We think that it is therefore by no means certain that Saunders will vote for another 50bp hike in June.
  • There was only a small reaction in money markets to this, but if other MPC members agree with Saunders' judgment of the range of neutral rates, the market path for rates looks increasingly implausible. This may be helping gilts move higher today (despite the moves being more in the belly than at the front-end).
BulletMarketsFixed Income BulletsHomepage
BulletMarketsFixed Income BulletsHomepage

To read the full story

Close

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.