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GILTS: Lower Following Pill, 41bp Of BoE Cuts Priced Through Dec

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Gilts are lower, with a bid in crude oil and comments from BoE chief economist Pill weighing.

  • Governor Bailey's comments yesterday sounded much more dovish than Pill did today, although we remind that Pill did dissent against the August rate cut, so the divergence in tone isn’t a huge surprise and was something we flagged the potential for ahead of today’s comments.
  • Zooming out, Pill sounded a little less hawkish when compared to some of his recent comments, but we aren’t sure he will support the idea of a cut in November, let alone sequential moves through year-end.
  • Gilt futures 97.82 last, after trading to fresh session lows of 97.80 post-Pill.
  • Next support comes in at 97.47, the 0.618 projection of the Sep 17-30-Oct 1 price swing, with the bearish move strengthening after the break of some key support levels.
  • Yields 2.5-5.5bp higher, bear flattening.
  • 10s through their early September high.
  • Widening in the UK/German 2-Year yield spread (+1bp) only reverses some of yesterday’s Bailey-driven 9bp narrowing, spread below 190bp, just.
  • BoE-dated OIS 1-4bp less dovish since Pill. 24bp of cuts priced for November, 41bp of cuts priced through December and 114bp of cuts showing through June.
  • Spill over from U.S. NFP data is set to dominate this afternoon.
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Gilts are lower, with a bid in crude oil and comments from BoE chief economist Pill weighing.

  • Governor Bailey's comments yesterday sounded much more dovish than Pill did today, although we remind that Pill did dissent against the August rate cut, so the divergence in tone isn’t a huge surprise and was something we flagged the potential for ahead of today’s comments.
  • Zooming out, Pill sounded a little less hawkish when compared to some of his recent comments, but we aren’t sure he will support the idea of a cut in November, let alone sequential moves through year-end.
  • Gilt futures 97.82 last, after trading to fresh session lows of 97.80 post-Pill.
  • Next support comes in at 97.47, the 0.618 projection of the Sep 17-30-Oct 1 price swing, with the bearish move strengthening after the break of some key support levels.
  • Yields 2.5-5.5bp higher, bear flattening.
  • 10s through their early September high.
  • Widening in the UK/German 2-Year yield spread (+1bp) only reverses some of yesterday’s Bailey-driven 9bp narrowing, spread below 190bp, just.
  • BoE-dated OIS 1-4bp less dovish since Pill. 24bp of cuts priced for November, 41bp of cuts priced through December and 114bp of cuts showing through June.
  • Spill over from U.S. NFP data is set to dominate this afternoon.