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Front End Surges & Curve Bull Steps As BoE Tightening Pricing Moderates Post-CPI

GILTS

Gilt futures gap high on the back of the softer than expected domestic CPI data, clearing 97.00 for the first time since 6 June, running ~150 ticks higher at typing. Cash trade sees 10-30bp of richening as the curve aggressively bull steepens and the degree of BoE tightening priced in moderates (terminal rare pricing comes in to ~5.90%, while odds of a follow up 50bp hike at next month’s MPC meeting are essentially 50/50). Comments from BoE’s Ramsden (on the topic of quantitative tightening) will be eyed, although post-CPI gyrations are certain to continue.

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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