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GILTS: Oil Weakness & Long End Auction Demand Drive Rally

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Solid demand and pricing at the latest long end gilt auction has pushed futures to fresh session highs, last +62 at 96.65.

  • Last Wednesday’s opening gap lower has been closed, next resistance located at the October 7 high (96.93), although a bearish technical backdrop remains in play after the recent sell off.
  • Yields 3-5bp lower, curve flattens.
  • Weakness in crude oil (mostly on signs that Israel will avoid attacking Iranian oil & nuclear sites) and Chinese equities provided support in early London trade, with a fresh extension lower in crude oil and weakness in European equities providing the latest cross-market tailwinds.
  • BoE-dated OIS prices 22bp of cuts for November, 35bp of cuts through December and 102bp of cuts through June, little changed to 3bp more dovish on the day.
  • SONIA futures -0.5 to +5.5.
  • We don’t think that this morning’s labour market data will change the votes of any MPC members, particularly given continued questions surrounding the accuracy of the quantity-based figures.
  • Tomorrow’s CPI data will be far more consequential for monetary policy: https://media.marketnews.com/UK_Data_Preview_2024_10_Release_6df920518b.pdf
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Solid demand and pricing at the latest long end gilt auction has pushed futures to fresh session highs, last +62 at 96.65.

  • Last Wednesday’s opening gap lower has been closed, next resistance located at the October 7 high (96.93), although a bearish technical backdrop remains in play after the recent sell off.
  • Yields 3-5bp lower, curve flattens.
  • Weakness in crude oil (mostly on signs that Israel will avoid attacking Iranian oil & nuclear sites) and Chinese equities provided support in early London trade, with a fresh extension lower in crude oil and weakness in European equities providing the latest cross-market tailwinds.
  • BoE-dated OIS prices 22bp of cuts for November, 35bp of cuts through December and 102bp of cuts through June, little changed to 3bp more dovish on the day.
  • SONIA futures -0.5 to +5.5.
  • We don’t think that this morning’s labour market data will change the votes of any MPC members, particularly given continued questions surrounding the accuracy of the quantity-based figures.
  • Tomorrow’s CPI data will be far more consequential for monetary policy: https://media.marketnews.com/UK_Data_Preview_2024_10_Release_6df920518b.pdf