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GILTS: Broader Bond Weakness & NHS Spending Speculation Weighs, Curve Steepens

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Spill over from weakness in EGBs, upticks in energy futures and speculation surrounding real spending increases for the NHS weigh on gilts this morning.

  • Futures -27 at 97.65, lows of 97.59.
  • Technicals remain bearish. Initial support not seen until the Oct 15 high (96.97).
  • Yields 1.5-4.5bp higher, curve steepens.
  • 2s10s hit fresh multi-month highs at 8.6bp, 5s30s comfortably within recent range at 70.0bp.
  • Outperformance seen vs. Bunds, 10-Year spread ~1bp tighter at 186bp.
  • Spread sticks within recent range after the pullback from cycle highs above 195bp. J.P.Morgan issued a spread narrower recommendation for that strategy late Friday.
  • Little of note on the UK calendar today, outside of GBP750mln of long dated gilt sales from the BoE’s APF, due this afternoon.
  • Calendar picks up tomorrow, with BoE’s Bailey, Greene & Breeden all set to speak, while public spending data will also cross.
  • Further out, flash PMI data (Thursday) will be eyed, as well as additional BoE communique.
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Spill over from weakness in EGBs, upticks in energy futures and speculation surrounding real spending increases for the NHS weigh on gilts this morning.

  • Futures -27 at 97.65, lows of 97.59.
  • Technicals remain bearish. Initial support not seen until the Oct 15 high (96.97).
  • Yields 1.5-4.5bp higher, curve steepens.
  • 2s10s hit fresh multi-month highs at 8.6bp, 5s30s comfortably within recent range at 70.0bp.
  • Outperformance seen vs. Bunds, 10-Year spread ~1bp tighter at 186bp.
  • Spread sticks within recent range after the pullback from cycle highs above 195bp. J.P.Morgan issued a spread narrower recommendation for that strategy late Friday.
  • Little of note on the UK calendar today, outside of GBP750mln of long dated gilt sales from the BoE’s APF, due this afternoon.
  • Calendar picks up tomorrow, with BoE’s Bailey, Greene & Breeden all set to speak, while public spending data will also cross.
  • Further out, flash PMI data (Thursday) will be eyed, as well as additional BoE communique.