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GILTS: Thurs Low In Futures & High In 10-Year Yields Helping Limit Sell Off

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Yesterday’s low in gilt futures & high in 10-Year yields limit the sell off in UK paper, with only modest breaches of yesterday’s extremes (99.55 & 3.9083%) seen in both benchmarks.

  • The broader-based weakness in bonds (covered in recent bullets) is spilling over into gilts, with Tsy block flow and French fiscal headlines at the fore.
  • Any extension lower in gilt futures would target the Sep 9 low (99.29).
  • Cash gilt yields 0.5-2.0bp higher across the curve, 10s lead the sell off.
  • BoE-dated OIS now prices just below 25bp of easing for the Nov MPC, but that is more a factor of the move in wider bond markets, as opposed to any hawkish changes of view.
  • 40bp of cuts are priced through year-end, with ~123bp of cuts showing through June ’25.
  • SONIA futures 0.5-2.5 lower on the day.
  • Flash PMIs headline next week’s UK data calendar, due Monday.
  • Inflation components, particularly in the services survey, will come under the usual scrutiny, given the BoE’s focus on the still elevated level of price rises in that sector. 
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Yesterday’s low in gilt futures & high in 10-Year yields limit the sell off in UK paper, with only modest breaches of yesterday’s extremes (99.55 & 3.9083%) seen in both benchmarks.

  • The broader-based weakness in bonds (covered in recent bullets) is spilling over into gilts, with Tsy block flow and French fiscal headlines at the fore.
  • Any extension lower in gilt futures would target the Sep 9 low (99.29).
  • Cash gilt yields 0.5-2.0bp higher across the curve, 10s lead the sell off.
  • BoE-dated OIS now prices just below 25bp of easing for the Nov MPC, but that is more a factor of the move in wider bond markets, as opposed to any hawkish changes of view.
  • 40bp of cuts are priced through year-end, with ~123bp of cuts showing through June ’25.
  • SONIA futures 0.5-2.5 lower on the day.
  • Flash PMIs headline next week’s UK data calendar, due Monday.
  • Inflation components, particularly in the services survey, will come under the usual scrutiny, given the BoE’s focus on the still elevated level of price rises in that sector.