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Gilts outperform USTs and German curve

GILTS

Gilts are outperforming both USTs and the German curve this morning despite UK January activity data coming in better than expected.

  • A Guardian story this morning that Chancellor Sunak is only planning to take "limited action to tackle the cost of living crisis" and won't enhance the energy bill reduction scheme is getting some attention. This would be in contrast to recent reports that the EU is looking for a fiscal solution to temporarily shield consumers from rising commodity prices, and would increase the risks of staglation and a more severe growth slowdown in the UK. Despite this, SONIA futures are lower on the day (but still nowhere near yesterday's lows).
  • 2y yields up 1.0bp today at 1.349%, 5y yields up 0.6bp today at 1.302%, 10y yields up 0.2bp today at 1.524%, 30y yields up 0.7bp today at 1.700%
  • 2s10s down -0.8bp today at 17.5bp, 10s30s up 0.5bp today at 17.6bp

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