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GILTS: Fresh Highs On U.S. PPI, Resistance In Futures Still Some Distance Away

GILTS
CEEMEABulletUKMarketsFixed Income Bullets

Spillover from the rally in Tsys/dovish Fed repricing on U.S. PPI readthrough for PCE pushes gilts to fresh session highs.

  • However, bulls are unable to get anywhere near challenging initial major resistance in futures, located at the February 6 high (94.35).
  • Curve flattening extends on the rally, benchmark yields are still 8-12bp off year-to-date lows.
  • Macro events continue to dominate UK-specific developments, with geopolitics/tariffs and U.S. data outweighing UK data and hawkish leaning comments from BoE’s Pill (we played down the importance of the UK data and Pill’s comments early today).
  • Note that the head of the DMO, Jessica Pulay, suggested that medium-term maturity gilts offer a sweet spot for investors at present (as evidenced by the demand and amount issued via this week’s syndication). While not market moving, it shows the DMO’s continued willingness to evolve its issuance intentions in line with investor appetite.
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Spillover from the rally in Tsys/dovish Fed repricing on U.S. PPI readthrough for PCE pushes gilts to fresh session highs.

  • However, bulls are unable to get anywhere near challenging initial major resistance in futures, located at the February 6 high (94.35).
  • Curve flattening extends on the rally, benchmark yields are still 8-12bp off year-to-date lows.
  • Macro events continue to dominate UK-specific developments, with geopolitics/tariffs and U.S. data outweighing UK data and hawkish leaning comments from BoE’s Pill (we played down the importance of the UK data and Pill’s comments early today).
  • Note that the head of the DMO, Jessica Pulay, suggested that medium-term maturity gilts offer a sweet spot for investors at present (as evidenced by the demand and amount issued via this week’s syndication). While not market moving, it shows the DMO’s continued willingness to evolve its issuance intentions in line with investor appetite.