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GILTS: Following EGB Rally

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Gilts followed EGBs higher this morning as heightened prospects of imminent French fiscal tightening took hold.

  • Futures trade as high as 99.15 before backing off to ~99.05, Bulls will look to break first meaningful resistance at the 20-day EMA (99.40) to start reasserting themselves and negate some of the growing bearish technical threat.
  • Yields 3.5-6.0bp lower, curve bull flattens.
  • Short 20-Year gilt supply was well received, extending the run of strong demand at auctions of the 4.75% Oct-43 gilt, with RV appeal (both on the curve and vs. swaps) aiding digestion.
  • No real impact from Monday’s late comments from BOE MPC member Greene, who intimated that further rate cuts were likely despite still “worrisome” services inflation, as broader inflation is on the right path.
  • BoE-dated OIS unwinds the early hawkish moves derived from Fed chair Powell’s late Monday comments, last printing little changed through mid-’25 contracts.
  • 23.5bp of cuts priced for Nov, 37bp of easing priced through year-end and ~119bp of cuts showing through June ’25.
  • SONIA futures flat to +7.0bp.
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Gilts followed EGBs higher this morning as heightened prospects of imminent French fiscal tightening took hold.

  • Futures trade as high as 99.15 before backing off to ~99.05, Bulls will look to break first meaningful resistance at the 20-day EMA (99.40) to start reasserting themselves and negate some of the growing bearish technical threat.
  • Yields 3.5-6.0bp lower, curve bull flattens.
  • Short 20-Year gilt supply was well received, extending the run of strong demand at auctions of the 4.75% Oct-43 gilt, with RV appeal (both on the curve and vs. swaps) aiding digestion.
  • No real impact from Monday’s late comments from BOE MPC member Greene, who intimated that further rate cuts were likely despite still “worrisome” services inflation, as broader inflation is on the right path.
  • BoE-dated OIS unwinds the early hawkish moves derived from Fed chair Powell’s late Monday comments, last printing little changed through mid-’25 contracts.
  • 23.5bp of cuts priced for Nov, 37bp of easing priced through year-end and ~119bp of cuts showing through June ’25.
  • SONIA futures flat to +7.0bp.