Budget And Financial Tightening In The Spotlight

Gilts have been bid through the afternoon and the curve has bull flattened alongside sustained gains for equities. This likely reflects a natural pullback from a heavy bout of selling last week, as well as some speculation that policymakers in the G10 could intervene to prevent a sustained tightening of financial conditions that would otherwise jeopardize the nascent economic recovery.

• Gilt yields are now 3-7bp lower on the day with the curve 3bp flatter. Last yields: 2-year 0.0774%, 5-year 0.3361%, 10-year 0.7454% 30-year 1.3194%.
• The Jun-21 gilt future has pushed higher since 1330 London and last trades at 128.48, 8 ticks off the day's high.
• The short sterling futures strip has flattened with whites/reds 0.5-4.0 ticks higher and greens/blues up 5.0-5.5 ticks.
• Focus this week is on Wednesday's budget where Chancellor of the Exchequer Rishi Sunak is expected to being signalling a normalisation of public finances as the economy recovers.
• Looking ahead to tomorrow's data slate, Nationwide House Price index for February ill be published 0700 London, although it is not a market-moving series.