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Bid, BoE Dovish Repricing Extends Further

GILTS

Gilts follow core global FI markets higher through the open

  • Futures register highest levels of the week, last +65 or so, a touch shy of best levels.
  • Cash trade sees 0.5-3.5bp richening as the curve bull steepens, with the outperformance in the front end of the curve aided by some fresh easing in BoE-dated OIS pricing.
  • Terminal rate pricing moves through yesterday’s base (a cumulative ~41bp of tightening is now seen), with recent dovish repricing extending.
  • Local headline flow has centred on continued signs of cooling in the labour market, most recently evidenced by the latest REC survey, although that won’t have been a particular market mover.
  • On the supply side the DMO has announced that it has received some feedback to consider holding a conventional gilt with a maturity of 40+ years. It is looking to potentially hold a tender on Wednesday 27 September and is seeking feedback by midday today.
  • The news is not entirely unexpected as the DMO said it would consider 30+ year tenders for both conventionals and linkers alongside the release of its FQ3 calendar.
  • Note that the domestic docket is essentially empty until the release of the next labour market report (Tuesday).
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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