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EGBs-GILTS CASH CLOSE: 30Y UK Yield Falls 100bp As BoE Steps In

BONDS

Gilts had a historic rally Wednesday after the BoE stepped in to the ongoing sell-off and re-launched bond purchases (if only temporarily) in order to quell market volatility.

  • While yields across the UK curve fell, the 30Y dropped 106bp on the session, trading in a range of 3.874% - 5.142% (the latter a post-1998 high).
  • The BoE emergency purchase operation itself was rather underwhelming, with the Bank accepting just over GBP1bln of the GBP5bln potential size - operations continue Thursday, to Oct 14.
  • But overall, bond markets calmed down considerably, helping German yields fall across the curve as well, with the short-end strongest despite a parade of ECB speakers discussing a 75bp hike in October and eyeing getting to neutral by end-year.
  • The relief rally helped BTPs turn it around today as well: 10Y spreads came off a post-Apr 2020 wide of 258bp to trade just below 241bp at the close.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany:

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Gilts had a historic rally Wednesday after the BoE stepped in to the ongoing sell-off and re-launched bond purchases (if only temporarily) in order to quell market volatility.

  • While yields across the UK curve fell, the 30Y dropped 106bp on the session, trading in a range of 3.874% - 5.142% (the latter a post-1998 high).
  • The BoE emergency purchase operation itself was rather underwhelming, with the Bank accepting just over GBP1bln of the GBP5bln potential size - operations continue Thursday, to Oct 14.
  • But overall, bond markets calmed down considerably, helping German yields fall across the curve as well, with the short-end strongest despite a parade of ECB speakers discussing a 75bp hike in October and eyeing getting to neutral by end-year.
  • The relief rally helped BTPs turn it around today as well: 10Y spreads came off a post-Apr 2020 wide of 258bp to trade just below 241bp at the close.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany:

Keep reading...Show less