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GILTS: Slightly Softer Following CPI

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Gilts a little lower after local CPI data matched consensus.

  • Futures move through yesterday’s low (100.92). More meaningful support located below at the Sep 10 peak (100.64). Technicals remain bullish.
  • Yields 1-2bp higher across the curve.
  • The lack of downside surprise in the CPI data resulted in hawkish adjustments, likely driven by an unwind of some of the recent build-up of dovish positioning, which itself was linked to moves in U.S. rates.
  • Our macro team’s initial reaction to the data noted that this is as close to consensus (for CPI) as we have had for some time, so should have little impact on the MPC decision tomorrow - or in the medium-term.
  • We had had already suggested that the BoE would likely look through today’s data, unless an unanticipated driver came to the fore.
  • Today’s FOMC decision is set to have greater impact on gilts than the domestic CPI release, given the unusually balanced pricing (between a 25 & 50bp cut) heading into the U.S. central bank’s decision.
  • Supply-wise, the DMO will come to market with GBP2.75bln of the 0.875% Jul-33 green gilt.
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Gilts a little lower after local CPI data matched consensus.

  • Futures move through yesterday’s low (100.92). More meaningful support located below at the Sep 10 peak (100.64). Technicals remain bullish.
  • Yields 1-2bp higher across the curve.
  • The lack of downside surprise in the CPI data resulted in hawkish adjustments, likely driven by an unwind of some of the recent build-up of dovish positioning, which itself was linked to moves in U.S. rates.
  • Our macro team’s initial reaction to the data noted that this is as close to consensus (for CPI) as we have had for some time, so should have little impact on the MPC decision tomorrow - or in the medium-term.
  • We had had already suggested that the BoE would likely look through today’s data, unless an unanticipated driver came to the fore.
  • Today’s FOMC decision is set to have greater impact on gilts than the domestic CPI release, given the unusually balanced pricing (between a 25 & 50bp cut) heading into the U.S. central bank’s decision.
  • Supply-wise, the DMO will come to market with GBP2.75bln of the 0.875% Jul-33 green gilt.