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Curve Off Flats After Another Soft 30-Year Auction

GILTS

Gilts outperform core global peers through 10s early Tuesday but have moved back from best levels.

  • Futures +35, while the major cash benchmarks run 0.5-2.5bp richer, with intermediates leading.
  • Another soft round of 30-Year gilt supply will have aided the underperformance in the longer end of the curve, allowing the early flattening bias to unwind, as well as promoting more mixed cross-market performance in ultra longs.
  • Fresh YtD highs for crude oil futures, followed by a light downtick, have had no real impact on gilts.
  • SONIA futures are firmer after the early richening in gilts, last showing flat to +4.5 through the blues.
  • BoE-dated OIS run little changed to 3bp softer on the day, also looking to moves in the longer end. ~22bp of tightening is showing for this week’s MPC, while terminal policy rate pricing sits a little below 5.65% once again.
  • Scheduled local event risk is limited to non-existent for the remainder of the day.
  • Our full preview of tomorrow’s CPI release can be found here:
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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