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GILTS: Lower As SONIA Sells Off

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Gilts follow SONIA markets lower, with the uptick in crude also factoring in.

  • Note that we aren’t 100% sure of the driver for the move in SONIA but have flagged some potential factors (long covering & risks of higher interest rates linked to increased borrowing doing the rounds in the local press).
  • Gilt futures trade as low as 96.59, comfortably through Friday’s low, strengthening the recent downtrend.
  • Bears now target the 1.00 projection of the Sep 17-30-October 1 price swing (96.23).
  • Yields are 3.5-6.5bp higher, curve bear flattens.
  • 2s are above 4.20% for the first time since early July.
  • 10s test the July 26 high (4.182%). A break there would expose the nearby 4.20% level, which protects the July 1 high (4.286%).
  • Little of note on the UK data calendar until Friday’s monthly economic activity readings.
  • The BoE will sell GBP600mln of long-dated bonds from its APF this afternoon.
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Gilts follow SONIA markets lower, with the uptick in crude also factoring in.

  • Note that we aren’t 100% sure of the driver for the move in SONIA but have flagged some potential factors (long covering & risks of higher interest rates linked to increased borrowing doing the rounds in the local press).
  • Gilt futures trade as low as 96.59, comfortably through Friday’s low, strengthening the recent downtrend.
  • Bears now target the 1.00 projection of the Sep 17-30-October 1 price swing (96.23).
  • Yields are 3.5-6.5bp higher, curve bear flattens.
  • 2s are above 4.20% for the first time since early July.
  • 10s test the July 26 high (4.182%). A break there would expose the nearby 4.20% level, which protects the July 1 high (4.286%).
  • Little of note on the UK data calendar until Friday’s monthly economic activity readings.
  • The BoE will sell GBP600mln of long-dated bonds from its APF this afternoon.