GILTS: Off Lows, U.S. Election Dominates, BoE Due Tomorrow

{GB} GILTS: Gilts off lows as repercussions from the U.S. election are continually assessed. Trump’s policy preferences (tariffs) are expected to harm growth outside of the U.S. (generally) and promote inflation.

• Futures around middle of 83-tick range, last +8 at 93.42.
• Yields 5bp lower to 1.5bp higher, curve twist steepens.
• 10+-Year yields registered fresh ’24 highs this morning, 30s tested 5.00% before backing off.
• 2s10s within multi-week range, last 4bp.
• 5s30s within the range seen over recent sessions, last 57bp, +5bp vs. yesterday’s close, which represented the flattest level seen since early June.
• BoE-dated OIS 0.5-8.0bp more dovish through Dec ’25.
• 23bp of cuts priced for tomorrow, 31.5bp priced through year-end, 58.5bp through March and 78bp through June.
• SONIA futures +7.0 to -0.5.
• Next domestic risk event is tomorrow’s BoE decision.
• All 54 names surveyed by BBG look for a 25bp cut.
• BMO the only sell-side name (that we have seen) looking for no change.
• Budget uncertainty may increase BoE caution surrounding further easing and could lead to 3 dissents against a cut at this meeting.
• We think there is a good chance of higher-than-expected inflation forecast.
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