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Curve Flattens, Subdued Demand At Latest I/L Auction

GILTS
Bank Of England (BOE) Market NewsHomepageBond Market NewsBulletMarketsFixed Income Bullets

Gilt futures are a little firmer after adjusting to Monday’s late uptick in U.S. Tsys. A subsequent pullback from session highs in wider core global FI has limited the move.

  • Futures last +14 at 98.63, sticking to a very narrow 14-tick range thus far.
  • The bullish technical picture for the contract remains intact. Initial resistance seen at 99.25, while initial support comes in at 98.21.
  • Cash gilt yields are 0.5bp higher to 3bp lower, as the curve flattens.
  • Both 2s10s and 5s30s have moved away from recent highs early this week.
  • 2s10s last -12.7bp vs. ’24 highs of -5.8bp. 5s30s last 61.9bp vs. June highs of 68.2bp.
  • GBP STIRs are essentially unchanged on the day, showing ~60% odds of a 25bp cut at the August MPC and ~47bp of cuts through year end.
  • GBP1.5bn of 0.75% Nov-33 I/L supply saw subdued demand, with a dip in the cover ratio and the average awarded price printing below pre-auction mids.
  • UK headline flow has been very limited.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Aug-245.053-14.7
Sep-244.985-21.5
Nov-244.836-36.4
Dec-244.733-46.7
Feb-254.593-60.7
Mar-254.494-70.6
May-254.370-83.0
Jun-254.275-92.5

Source: MNI - Market News/Bloomberg. 2025 meeting dates are estimated.

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Gilt futures are a little firmer after adjusting to Monday’s late uptick in U.S. Tsys. A subsequent pullback from session highs in wider core global FI has limited the move.

  • Futures last +14 at 98.63, sticking to a very narrow 14-tick range thus far.
  • The bullish technical picture for the contract remains intact. Initial resistance seen at 99.25, while initial support comes in at 98.21.
  • Cash gilt yields are 0.5bp higher to 3bp lower, as the curve flattens.
  • Both 2s10s and 5s30s have moved away from recent highs early this week.
  • 2s10s last -12.7bp vs. ’24 highs of -5.8bp. 5s30s last 61.9bp vs. June highs of 68.2bp.
  • GBP STIRs are essentially unchanged on the day, showing ~60% odds of a 25bp cut at the August MPC and ~47bp of cuts through year end.
  • GBP1.5bn of 0.75% Nov-33 I/L supply saw subdued demand, with a dip in the cover ratio and the average awarded price printing below pre-auction mids.
  • UK headline flow has been very limited.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Aug-245.053-14.7
Sep-244.985-21.5
Nov-244.836-36.4
Dec-244.733-46.7
Feb-254.593-60.7
Mar-254.494-70.6
May-254.370-83.0
Jun-254.275-92.5

Source: MNI - Market News/Bloomberg. 2025 meeting dates are estimated.