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GILTS: Soft Reception Of 10-Year Auction Weighs In Recent Trade, Off Lows

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Gilts are softer this morning, although they have recovered from session lows.

  • Gilt futures -21 at 93.81 vs. lows of 93.53.
  • Yields 1-2bp higher across the curve, 10s lead the sell off.
  • Spread vs. Bunds little changed around 206bp.
  • Early weakness and subsequent recovery from lows seemed to be tied to broader movement in core global FI markets.
  • Fresh selling pressure then emerged after the latest 10-Year gilt auction saw a lower cover ratio vs. the previous auction, while the lowest accepted price was below pre-auction mids.
  • Those results won’t help sentiment following the large increase in issuance announced last week.
  • Recent comments from the OBR suggested that post-Budget market moves have matched their expectations.
  • BoE-dated OIS is little changed to 3bp less dovish on the day, showing 22.5bp of cuts for Thursday, 30.5bp of cuts through year-end, 57bp of easing through March and 75bp of easing through June.
  • SONIA futures +0.25 to -4.5.  Still not retesting last week’s lows.
  • No impact from lower tier domestic data and final services/composite PMI prints (latter saw marginal upward revisions).
  • The remainder of the session will see eyes on spillover from any potential last minute pre-U.S. election positioning.
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Gilts are softer this morning, although they have recovered from session lows.

  • Gilt futures -21 at 93.81 vs. lows of 93.53.
  • Yields 1-2bp higher across the curve, 10s lead the sell off.
  • Spread vs. Bunds little changed around 206bp.
  • Early weakness and subsequent recovery from lows seemed to be tied to broader movement in core global FI markets.
  • Fresh selling pressure then emerged after the latest 10-Year gilt auction saw a lower cover ratio vs. the previous auction, while the lowest accepted price was below pre-auction mids.
  • Those results won’t help sentiment following the large increase in issuance announced last week.
  • Recent comments from the OBR suggested that post-Budget market moves have matched their expectations.
  • BoE-dated OIS is little changed to 3bp less dovish on the day, showing 22.5bp of cuts for Thursday, 30.5bp of cuts through year-end, 57bp of easing through March and 75bp of easing through June.
  • SONIA futures +0.25 to -4.5.  Still not retesting last week’s lows.
  • No impact from lower tier domestic data and final services/composite PMI prints (latter saw marginal upward revisions).
  • The remainder of the session will see eyes on spillover from any potential last minute pre-U.S. election positioning.