Gilt Week Ahead - 20 July 2020

It will be a slightly quieter week ahead for the UK after last week's slew of data, OBR Financial Stability Report and DMO remit update. However there are still a number of key events in the week ahead. MPC members Haldane and Tenreyro will both appear before the Treasury Select Committee on Monday and are likely to publish their annual reports. Fellow MPC member Haskel will also give a webinar on the economic impacts of COVID-19 this week at midday on Thursday.

On the data front the highlight will be flash PMI data on Friday. The survey period is yet to be confirmed but we would expect the period of 13-23 July and therefore fully after Rishi Sunak's Summer Economic Statement. With "Super Saturday" which marked the latest downgrade in lockdown restrictions occurring on 4 July, these data should give us a good indication of how businesses have fared and how confidence has evolved as parts of the economy have moved to a new normal. Consensus for manufacturing, services and the composite PMIs are all above 50. We would also remind our readers again that the PMIs answer questions asking whether things are better, worse or unchanged. A lot of things should have got better for a lot of businesses in July so readings above 50 make sense. Friday will also see June retail sales released with sales expected to see another big bounceback following May's 10.2% ex fuel rise. Public finance data on Tuesday will likely be less informative than normal given the recent OBR public finance update.

On Monday afternoon, the DMO will release the agenda for its investor and GEMMs consultations that it will be holding next week. We already know from the Thursday remit update (see MNI Gilt Remit Analysis) the proposed number of auctions for each maturity bucket, average auction sizes and have a provisional calendar so there will be less new news than in other agenda publications. We will be looking for any guide on the potential syndication candidates - the most obvious being a reopening of the 0.50% Oct-61 gilt that was launched by syndication in May but has not been reopened since. The candidate for the second syndication seems less set in stone, however. Unless long-dated gilts launched via syndication or linkers, it also seems fairly unlikely that there will be any other new gilts on offer with 3/5/7/10/30-year gilts all having been launched in this fiscal year already and not yet up to sizes of previous benchmarks. The 1.25% Oct-41 and the 1.625% Oct-54 which mark the 20 and 35 year areas also have scope to be grown in size fairly substantially still. In fact the only area of the gilt curve that doesn't have a substantial benchmark is the 15-year area.

This product contains everything that you need to know about net supply in the gilt market in a concise document including:

• Cash flow and QE trackers with estimates of net issuance in the months ahead.
• A table of all gilts in issue, with the amount outstanding and BoE/Treasury holdings.
• The issuance calendar for 2019/20 and 2020/21 with MNI expectations for each auction.
• Other key significant dates including next BoE APF purchase dates.
• Cash flow matrix showing upcoming issuance, coupon and redemption payments.
• Month-by-month issuance tables for 2020/21, 2019/20 and 2018/19.

For the full document see: https://emedia.marketnews.com/GiltWeekAhead20072020.pdf