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GILTS: Continued Hawkish Repricing Weighs, Front End Leads Move

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Pressure from continued hawkish repricing in the GBP short end limits any recoveries in gilts, with fresh selling seen in recent trade. Digestion of the Budget remains front and centre.

  • Futures to fresh session lows of 94.09.
  • Yields 7-10.5bp higher, curve flattens.
  • 5- to 30-Year yields register fresh ’24 highs, 5s30s hits lowest level since June.
  • 10-Year yields hit ~4.44%, with the 10-Year gilt/Bund spread pinned to 200bp.
  • 4.43% in 10s represented the 76.4% retracement of the move from October ’23 high to the December ’23 low. That equates to 94.18 in futures, which has been pierced.
  • A more meaningful break would probably shift focus to the round numbers of 4.45% & 4.50%, which equate to 93.97 & 93.46 in futures today, respectively.
  • BoE-dated OIS show 21.5bp of cuts for November, 28bp through year-end and 78bp of easing through June.
  • That compares to 22.5bp, 38bp and 101bp late Tuesday.
  • SONIA futures now flat to -13.0.
  • The first post-Budget supply test comes shortly, as the DMO looks to sell GBP2.25bln of the 1.50% Jul-53 green gilt.
  • DMO chief Pulay told us that increases to the UK’s issuance plans to fund the government’s 2024-25 budget were influenced by investor appetite for longer-term debt.
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Pressure from continued hawkish repricing in the GBP short end limits any recoveries in gilts, with fresh selling seen in recent trade. Digestion of the Budget remains front and centre.

  • Futures to fresh session lows of 94.09.
  • Yields 7-10.5bp higher, curve flattens.
  • 5- to 30-Year yields register fresh ’24 highs, 5s30s hits lowest level since June.
  • 10-Year yields hit ~4.44%, with the 10-Year gilt/Bund spread pinned to 200bp.
  • 4.43% in 10s represented the 76.4% retracement of the move from October ’23 high to the December ’23 low. That equates to 94.18 in futures, which has been pierced.
  • A more meaningful break would probably shift focus to the round numbers of 4.45% & 4.50%, which equate to 93.97 & 93.46 in futures today, respectively.
  • BoE-dated OIS show 21.5bp of cuts for November, 28bp through year-end and 78bp of easing through June.
  • That compares to 22.5bp, 38bp and 101bp late Tuesday.
  • SONIA futures now flat to -13.0.
  • The first post-Budget supply test comes shortly, as the DMO looks to sell GBP2.25bln of the 1.50% Jul-53 green gilt.
  • DMO chief Pulay told us that increases to the UK’s issuance plans to fund the government’s 2024-25 budget were influenced by investor appetite for longer-term debt.