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GILTS: Cross-Market Cues Still Dominate, Friday's Highs Cap Rallies In Futures

GILTS
CEEMEABulletUKMarketsFixed Income Bullets

Swings in wider core global FI markets continue to dictate price action in gilts, with Friday’s high (96.25) capping rallies so far.

  • Gilt futures last 96.07, yields 1bp lower to 1.5bp higher, curve twist steepens.
  • Spread to Bunds off session highs of 219.6bp, last +3.5np at ~218.5bp
  • French Budget risks dominate news wires, with headline-generated vol. in OATs (outright and spreads) spilling over into wider core global FI.
  • A pullback from Friday’s highs in Tsys also factors into gilt/Bund widening given respective betas.
  • Potential for triple gilt issuance this week, with the DMO currently holding a consultation for a long end tender.
  • This would represent only the second week that has seen triple bond supply since 2021, if it does come to pass.
  • This could be weighing a little on the long end.
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Swings in wider core global FI markets continue to dictate price action in gilts, with Friday’s high (96.25) capping rallies so far.

  • Gilt futures last 96.07, yields 1bp lower to 1.5bp higher, curve twist steepens.
  • Spread to Bunds off session highs of 219.6bp, last +3.5np at ~218.5bp
  • French Budget risks dominate news wires, with headline-generated vol. in OATs (outright and spreads) spilling over into wider core global FI.
  • A pullback from Friday’s highs in Tsys also factors into gilt/Bund widening given respective betas.
  • Potential for triple gilt issuance this week, with the DMO currently holding a consultation for a long end tender.
  • This would represent only the second week that has seen triple bond supply since 2021, if it does come to pass.
  • This could be weighing a little on the long end.