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GILTS: Futures Test Support, Early Widening Vs. Bunds Reversed

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Early gilt weakness extends as Bunds sell off on the regional German CPI data.

  • Bears threaten initial support in futures, testing Friday’s low (98.31).
  • Yields ~4bp higher across the curve in a parallel shift.
  • 10-Year Gilt/Bund initially widened beyond last week’s multi-year closing high, seemingly driven by views linked to last week’s dovish ECB repricing.
  • The subsequent Bund weakness then pushed the spread back below 185bp, little changed on the day.
  • Goldman recommend short 10s on the 2s10s30s fly, while J.P.Morgan issued a long 5s recommendation late Friday.
  • BoE-dated OIS also moved in sympathy with EUR peers.
  • 23.5bp of cuts now priced for Nov, 36.5bp of cuts price through year-end and 118bp of cuts priced through June ’25. That compares to 24.5bp, 39bp and 126bp early today.
  • SONIA futures 0.5-6.5bp lower, at session lows across the strip.
  • Today will bring another round of comments from BoE's Greene (21:10, well after market close), although greater focus is likely to fall on Friday comments from BoE chief economist Pill.
  • GBP800mln of short-dated BoE APF sales also due today.
  • Spill over may come from comments made by ECB President Lagarde (14:00 London), while Fed Chair Powell will speak after the gilt close (18:55 London).
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Early gilt weakness extends as Bunds sell off on the regional German CPI data.

  • Bears threaten initial support in futures, testing Friday’s low (98.31).
  • Yields ~4bp higher across the curve in a parallel shift.
  • 10-Year Gilt/Bund initially widened beyond last week’s multi-year closing high, seemingly driven by views linked to last week’s dovish ECB repricing.
  • The subsequent Bund weakness then pushed the spread back below 185bp, little changed on the day.
  • Goldman recommend short 10s on the 2s10s30s fly, while J.P.Morgan issued a long 5s recommendation late Friday.
  • BoE-dated OIS also moved in sympathy with EUR peers.
  • 23.5bp of cuts now priced for Nov, 36.5bp of cuts price through year-end and 118bp of cuts priced through June ’25. That compares to 24.5bp, 39bp and 126bp early today.
  • SONIA futures 0.5-6.5bp lower, at session lows across the strip.
  • Today will bring another round of comments from BoE's Greene (21:10, well after market close), although greater focus is likely to fall on Friday comments from BoE chief economist Pill.
  • GBP800mln of short-dated BoE APF sales also due today.
  • Spill over may come from comments made by ECB President Lagarde (14:00 London), while Fed Chair Powell will speak after the gilt close (18:55 London).