MNI China Daily Summary: Wednesday, December 11

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GILT AUCTION RESULTS: Disappointing tail on 30-year auct; little pricing impact

GILT AUCTION RESULTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets
  • Despite a decent volume of bids (evident from the 2.89x bid-to-cover) the lowest accepted price of 100.613 was lower than the secondary market price 35 minutes prior to the auction window closing.
  • This resulted in a tail of 0.9bp - but the tail was exacerbated by the average price of 100.768 being very healthy (the highest price during the auction window was 100.744).
  • There has been little knock on impact on prices, and the price of the 4.375% Jul-54 gilt is now similar to 10 minutes before the bidding window closed.
  • Gilt futures saw a minor blip on the release of the result but have largely ignored the auction result.
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  • Despite a decent volume of bids (evident from the 2.89x bid-to-cover) the lowest accepted price of 100.613 was lower than the secondary market price 35 minutes prior to the auction window closing.
  • This resulted in a tail of 0.9bp - but the tail was exacerbated by the average price of 100.768 being very healthy (the highest price during the auction window was 100.744).
  • There has been little knock on impact on prices, and the price of the 4.375% Jul-54 gilt is now similar to 10 minutes before the bidding window closed.
  • Gilt futures saw a minor blip on the release of the result but have largely ignored the auction result.