Goldman Don’t See Scope For Further Front End Outperformance Vs. Peers, 10-Year ’24 Call Unch

Goldman Sachs write “over the winter break, data has continued to point to a faster disinflation profile in the UK. Our economists have pulled forward their expectation of the first BoE cut to May (from June previously).”

• “Beyond that, they expect the BoE to ease at every meeting until reaching the terminal rate of 3.0%.”
• “Against that backdrop, we have taken a more positive view on UK GDP growth, as the drag on consumption from mortgages is set to be smaller than we anticipated previously.”
• “We note that the easing priced in the UK curve over 2024 has largely converged to that priced in the Euro area and US, and in the near-term we don’t expect further outperformance at the UK front-end.”
• “At the long-end, better growth news should also limit the scope for a rally in UK duration, especially if we see further fiscal loosening, and therefore we leave unchanged our 10y Gilt forecast of 3.75% at end-24.”