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GILTS: Fade From Early Highs, Little Changed Ahead Of Reeves' Appearance

GILTS
CEEMEABulletUKMarketsFixed Income Bullets

The early bid in gilts fades alongside a similar move in wider global FI.

  • Pressure around EU/EGB syndications, a move off lows in oil and continued questions surrounding medium-term French political and fiscal risks initially pushed bonds away from session highs. Oil has pulled back since.
  • Gilt futures last flat at 89.30 vs. highs of 89.72.
  • Bearish technicals intact, initial support & resistance located at 88.96/90.31.
  • Yields little changed to 1.5bp lower on the day, curve steeper.
  • 10s spread to Bunds 1.5bp tighter around 225bp.
  • Decent demand at the latest 30-Year I/L auction did little to counter the pullback, although the DMO will have welcomed such results given the weakness in bonds seen in recent weeks alongside questions surrounding the UK’s fiscal health. Yield levels on offer will have aided takedown.
  • BoE-dated OIS prices 42bp of cuts through ’25 vs. 44bp early today. Hawkish cycle extremes situated at 39bp.
  • SONIA futures -1.5 to +1.0.
  • Chancellor Reeves will appear in the Commons later today (around 12:30 London), with MPs set to question her on the UK’s fiscal outlook after the recent increase in market-based fiscal risk premia.
  • Beyond that, tomorrow will see the latest round of CPI data (expect our full preview later today), comments from BoE dovish dissenter Taylor and an auction of the GBP4.00bln of the 10-year 4.25% Jul-34 gilt.
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The early bid in gilts fades alongside a similar move in wider global FI.

  • Pressure around EU/EGB syndications, a move off lows in oil and continued questions surrounding medium-term French political and fiscal risks initially pushed bonds away from session highs. Oil has pulled back since.
  • Gilt futures last flat at 89.30 vs. highs of 89.72.
  • Bearish technicals intact, initial support & resistance located at 88.96/90.31.
  • Yields little changed to 1.5bp lower on the day, curve steeper.
  • 10s spread to Bunds 1.5bp tighter around 225bp.
  • Decent demand at the latest 30-Year I/L auction did little to counter the pullback, although the DMO will have welcomed such results given the weakness in bonds seen in recent weeks alongside questions surrounding the UK’s fiscal health. Yield levels on offer will have aided takedown.
  • BoE-dated OIS prices 42bp of cuts through ’25 vs. 44bp early today. Hawkish cycle extremes situated at 39bp.
  • SONIA futures -1.5 to +1.0.
  • Chancellor Reeves will appear in the Commons later today (around 12:30 London), with MPs set to question her on the UK’s fiscal outlook after the recent increase in market-based fiscal risk premia.
  • Beyond that, tomorrow will see the latest round of CPI data (expect our full preview later today), comments from BoE dovish dissenter Taylor and an auction of the GBP4.00bln of the 10-year 4.25% Jul-34 gilt.