GILTS: Spread To Bunds Around Cycle Wides, BoE’s Pill Due Later

Gilts again look to U.S. Tsys for direction this morning, selling off after Trump’s tariff threats against China, Canada & Mexico.

• Futures last -34 at 94.82 vs. lows of 94.74.
• Initial support & resistance at yesterday’s range boundaries (94.58/95.35), corrective bullish cycle remains in play within bearish trend.
• Yields ~2bp higher across the curve.
• 10-Year yields hit the lowest level seen since late October yesterday, printing 4.316%.
• The benchmark stabilised around the October 29 level that we flagged ahead of time (4.317%), before retaking 4.35% this morning.
• Gilt/Bund spread hovers 0.2bp below cycle closing highs, last 215.6bp.
• Expected strong demand materialised at today’s 1.25% Nov-54 I/L gilt syndication, with order books hitting GBP65bln and spread set at the tight end of the guidance range, per bookrunners.
• SONIA futures flat to 4.5 lower, given increased inflation premium linked to Trump’s latest tariff comments.
• BoE-dated OIS flat to 1.5bp more hawkish on the day, showing 2bp of cuts for next month, 21.5bp of easing through February, 30.5bp of cuts through March, 54bp of easing through June and 75bp of cuts through Dec ’25.
• Comments from BoE chief economist Pill (15:00 London) will be closely monitored, given his previous hawkish dissent.