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GILTS: Wider, Risk Of Increased Issuance Continues To Weigh

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Gilts continue to underperform core global peers as markets remain highly sensitive to the risk of increased issuance.

  • While Chancellor Reeves didn’t mention anything ‘new’ to the Sunday Times, the article underscored the risk of increased public investment/higher gilt issuance.
  • Futures -4 at 96.23 vs. lows of 96.20, late Friday rally unwound.
  • Bearish technical cycle intact. Support at the Oct 10 low (95.83), resistance at the Oct 7 high (96.93).
  • Yields 1bp lower to 2bp higher, curve twist steepens.
  • 2s10s hits fresh multi-week highs, 5s30s ~7bp steeper than last Monday’s close,
  • 10s widen by a little over 1bp vs. Bunds, back above 195bp. Last week’s cycle highs present the only point of meaningful interest ahead of 200bp.
  • BoE-dated OIS a touch more hawkish vs. Friday’s closing levels, but little changed on the day/within recent ranges. 22bp of cuts priced through November, 35bp through Dec and 102bp through June.
  • SONIA futures +4.0 to -1.0, off early highs, with the move in gilts limiting the early rally.
  • No comments from BoE’s Dhingra seen.
  • PM Starmer is set to roll out familiar rhetoric re: attracting investment at a summit.
  • Elsewhere, the BoE will sell GBP800mln of short maturity gilts from its APF.
  • This week’s UK calendar will be headlined by the CPI & labour market reports, covered in greater detail in our morning STIR bullet (full preview due later).
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Gilts continue to underperform core global peers as markets remain highly sensitive to the risk of increased issuance.

  • While Chancellor Reeves didn’t mention anything ‘new’ to the Sunday Times, the article underscored the risk of increased public investment/higher gilt issuance.
  • Futures -4 at 96.23 vs. lows of 96.20, late Friday rally unwound.
  • Bearish technical cycle intact. Support at the Oct 10 low (95.83), resistance at the Oct 7 high (96.93).
  • Yields 1bp lower to 2bp higher, curve twist steepens.
  • 2s10s hits fresh multi-week highs, 5s30s ~7bp steeper than last Monday’s close,
  • 10s widen by a little over 1bp vs. Bunds, back above 195bp. Last week’s cycle highs present the only point of meaningful interest ahead of 200bp.
  • BoE-dated OIS a touch more hawkish vs. Friday’s closing levels, but little changed on the day/within recent ranges. 22bp of cuts priced through November, 35bp through Dec and 102bp through June.
  • SONIA futures +4.0 to -1.0, off early highs, with the move in gilts limiting the early rally.
  • No comments from BoE’s Dhingra seen.
  • PM Starmer is set to roll out familiar rhetoric re: attracting investment at a summit.
  • Elsewhere, the BoE will sell GBP800mln of short maturity gilts from its APF.
  • This week’s UK calendar will be headlined by the CPI & labour market reports, covered in greater detail in our morning STIR bullet (full preview due later).