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MNI Gilt Week Ahead - 27 July 2020

27 July 2020, Tim Davis

For the full document click here

A slightly quieter week ahead of next week's MPR meeting, the domestic highlight of the week ahead will be the DMO consultations today and the release of the gilt calendar for the September to November period on Friday.

The most interesting feedback will be regarding the launch of a new 15-year gilt via syndication. We had noted in last week's Gilt Week Ahead that the only area of the curve that didn't have a substantial benchmark was the 15year area. However, the 15-year area also does not see the most natural demand in the UK historically, being a bit too long to see large numbers of foreign investors generally interested but too short for large demand from pension funds. At this point we would still expect there to be enough support for the 15-year syndication to go ahead but we think that it might not be on the scale of the syndicated launches in May and June.

A new Jan-24 gilt will be less controversial and would be eligible for the BOE's APF scheme for the first few months of launch. But we think there may be scope to push the launch of a new 10-year gilt back to January and continue to build up the 0.375% Oct-30 gilt through the September to November period.

There are no MPC members scheduled to speak (with the blackout period ahead of next week's MPC meeting starting this week). We will send out a full preview next week but the Bank's forecasts in the MPR will be watched closely. Possibly even more important for the gilt market will be any update on the pace of QE purchases going forward. We provisionally look for the pace of purchases to drop to around GBP800mln/week, down from the current pace of GBP1.151bln/week.

Brexit talks will continue this week, although expectations remain low with little progress on the level playing field and on fisheries. Elsewhere, there are no major economic data releases this week and the FOMC meeting is likely to be closely watched by markets in general.

Auction previews for the week ahead are in the PDF document.

For the full document click here

GiltWeekAhead27072020.pdf

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.
  • We will release an updated version of the product every week

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