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GILTS: Fiscal Uncertainty Continues To Drive Gilt Widening

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Gilt widening sticks, even with the rally away from session lows in core global FI markets.

  • Uncertainty surrounding UK fiscal policy and Citi’s (caveated) warning shot on that front has undermined gilts today.
  • No immediate cross-market demand derived from Legal & General identifying a preference for gilts over Tsys & Bunds, based on expectations for an expedited BoE rate cutting cycle, looking to fade the recent widening in UK paper.
  • 10-Year gilt/Bunds adds nearly 4bp of the move, set to close above 196bp for the first time since August ’23.
  • Little of note between prevailing levels and psychological round number resistance at 200bp.

Fig. 1: UK/Germany 10-Year Yield Spread (bp)

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Gilt widening sticks, even with the rally away from session lows in core global FI markets.

  • Uncertainty surrounding UK fiscal policy and Citi’s (caveated) warning shot on that front has undermined gilts today.
  • No immediate cross-market demand derived from Legal & General identifying a preference for gilts over Tsys & Bunds, based on expectations for an expedited BoE rate cutting cycle, looking to fade the recent widening in UK paper.
  • 10-Year gilt/Bunds adds nearly 4bp of the move, set to close above 196bp for the first time since August ’23.
  • Little of note between prevailing levels and psychological round number resistance at 200bp.

Fig. 1: UK/Germany 10-Year Yield Spread (bp)

Keep reading...Show less