Free Trial

Gilts look to close steady to lower....>

GILT SUMMARY: Gilts look to close steady to lower following a volatile afternoon
session that saw 10-yr Bund yield swing in a 5bp range. Yield curve is bear
flattening as short-end underperforms.
- Gilt market spiked into life just before 1200GMT with a sudden sell-off that
saw the future contract dropping sharply from 124.24 to intra-day low of 123.84
within the space of 20 minutes with circa 10k contracts going through screens,
aided by strong ADP numbers and optimism on US economy. Gilts made a remarkable
recovery though, taking cue from rally in USTs following soft US ISM data.
- 2-yr Gilt yield is +2.7bp at 0.488%, 5-yr +3.1bp at 0.812%, 10-yr +1.3bp at
1.347% and 30-yr +0.1bp at 1.90% according to tradeweb.
- Sources also reported heavy selling in short sterling strip from Mar18 to
Jun20 contracts in circa 70k at same time Gilts sold of sharply. According to
MNI PINCH markets are pricing in a 98% of a 25bp rate hike by BoE tomorrow,
however, focus in on size of majority and forward guidance language.
- 5-yr, 10-yr and 30-yr breakevens are 2.2bp, 1bp and 1.6bp wider respectively,
while swaps spreads are mixed but little changed.

To read the full story


MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.