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GILTS: Long End Swap Spreads Wider Post-BoE, Prospect Of Issuance Increase Caps

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Contained widening for long end swap spreads since yesterday’s BoE decision.

  • The initial post-BoE playbook for 30-Year swap spreads has matched one of the scenarios we outlined in the lead up to the decision: https://marketnews.com/gilts-we-see-slightly-more-aggressive-qt-then-consensus-swap-tightening-risk
  • The move wider came as residual pricing of a larger-than-consensus BoE QT announcement was unwound.
  • The move has probably been capped by the risk of an increase to the size of the gilt issuance remit in the Autumn Budget.
  • A reminder that this morning’s public sector borrowing data underscored that risk, producing another month of higher-than-expected figures.
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Contained widening for long end swap spreads since yesterday’s BoE decision.

  • The initial post-BoE playbook for 30-Year swap spreads has matched one of the scenarios we outlined in the lead up to the decision: https://marketnews.com/gilts-we-see-slightly-more-aggressive-qt-then-consensus-swap-tightening-risk
  • The move wider came as residual pricing of a larger-than-consensus BoE QT announcement was unwound.
  • The move has probably been capped by the risk of an increase to the size of the gilt issuance remit in the Autumn Budget.
  • A reminder that this morning’s public sector borrowing data underscored that risk, producing another month of higher-than-expected figures.