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Budget largely in line with expectations; consultation agenda due out shortly

  • The Budget today threw up few surprises as expected. We had already received the headline measures on the energy price guarantee and the other big measures had been well telegraphed in the press: extra money on defence, fuel duty freeze for 12 months, replacement for the superdeducatable (to encourage investment) and an extension of the 30 free hours of childcare to children aged 9 months and above (rather than just for 3+ year olds at present).
  • The gilt remit of GBP241.1bln was close enough to expectations to cause no real market moves (the median expectation was GBP230.8bln from the 11 previews that we read) and the maturity split was also fairly close to expectations.
  • Overall, the gilt market has been much more focused on other events but with 2-year gilts underperforming Schatz and 2-year USTs. 2-year gilt yields are up 18bp at writing versus increases of 40+bp for Schatz/2-year USTs.
  • This has led to the UK curve seeing more of a parallel shift versus the bull steepening seen elsewhere.
  • Note that the DMO is due to release the consultation agenda for Monday's investor/GEMM meetings at 15:30GMT, which should give us more of an insight into April to June issuance.

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