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Free AccessMNI 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.
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This product contains everything that you need to know about net supply in the gilt market in a concise document including:
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.