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GILTS: Off Early Lows, Wider Vs. Bunds Again

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Gilts lower at the open, widening 1.5bp vs. Bunds

  • No overt driver that we have seen, but some may continue to play the BoE’s reluctance to commit to further easing vs. the increased odds of a more aggressive ECB cutting cycle following Friday’s softer-than-expected Spanish & French CPI data.
  • Futures within Friday’s range, trading as low as 98.50 before recovering to 98.65.
  • Yields little changed to 1bp higher, curve steepens.
  • Goldman Sachs have recommended shorting 10-Year gilts on the 2s10s30s fly, noting that “lower active BoE QT sales and a skew towards shorter issuance profile by the DMO suggest further outperformance could come.”
  • SONIA futures & BoE pricing roughly in line with levels provided in our pre-gilt open bullet (please read that piece for exact levels).
  • Today will bring another round of comments from BoE's Greene (21:10, well after market close).
  • GBP800mln of short-dated BoE APF sales is due today. 
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Gilts lower at the open, widening 1.5bp vs. Bunds

  • No overt driver that we have seen, but some may continue to play the BoE’s reluctance to commit to further easing vs. the increased odds of a more aggressive ECB cutting cycle following Friday’s softer-than-expected Spanish & French CPI data.
  • Futures within Friday’s range, trading as low as 98.50 before recovering to 98.65.
  • Yields little changed to 1bp higher, curve steepens.
  • Goldman Sachs have recommended shorting 10-Year gilts on the 2s10s30s fly, noting that “lower active BoE QT sales and a skew towards shorter issuance profile by the DMO suggest further outperformance could come.”
  • SONIA futures & BoE pricing roughly in line with levels provided in our pre-gilt open bullet (please read that piece for exact levels).
  • Today will bring another round of comments from BoE's Greene (21:10, well after market close).
  • GBP800mln of short-dated BoE APF sales is due today.