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GILTS: Widening Noted

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Have received a few questions surrounding the latest round of relative weakness in gilts, with Gilt/Bunds another ~3.5bp wider, last ~193bp, registering fresh cycle highs today.

  • UK headline flow has been particularly light.
  • No sign of swaps driving the move, with spreads to gilts little changed to tighter.
  • We previously noted:
  • Dovish ECB repricing has driven most of the widening seen in recent sessions.
  • Meanwhile, the stickier short-term inflation outlook and relatively resolute economic performance in the UK factors in on the gilt side.
  • The BoE's reluctance to firmly commit to follow up rate cuts and the risk of increased UK issuance are also impacting the Gilt/Bund spread.
  • A higher UK beta to U.S.-driven moves (post-ADP employment data) also helps explain some of the gilt widening vs. Bunds, at least intraday.
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Have received a few questions surrounding the latest round of relative weakness in gilts, with Gilt/Bunds another ~3.5bp wider, last ~193bp, registering fresh cycle highs today.

  • UK headline flow has been particularly light.
  • No sign of swaps driving the move, with spreads to gilts little changed to tighter.
  • We previously noted:
  • Dovish ECB repricing has driven most of the widening seen in recent sessions.
  • Meanwhile, the stickier short-term inflation outlook and relatively resolute economic performance in the UK factors in on the gilt side.
  • The BoE's reluctance to firmly commit to follow up rate cuts and the risk of increased UK issuance are also impacting the Gilt/Bund spread.
  • A higher UK beta to U.S.-driven moves (post-ADP employment data) also helps explain some of the gilt widening vs. Bunds, at least intraday.