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GILTS: Intraday Outperformance Holds Ahead Of A Busier UK Schedule On Tuesday

GILTS
CEEMEABulletUKMarketsFixed Income Bullets

Gilts continue to outperform German peers, with our best guess being that the latest downbeat snippets surrounding the UK labour market (REC-KPMG Report on Jobs and comments from Bank of America) have supported UK paper today.

  • Little else of note on the UK news front, with focus on the upcoming syndication of the new 4.50% Mar-35 gilt (we look for that to price tomorrow), as well as Tuesday’s scheduled comments from BoE’s Bailey & Mann.
  • Our gilt week ahead publication covers the syndication and previews the comments from Mann in greater detail.
  • Futures +46 at 93.66 (93.13-67 range).
  • Initial support and resistance (92.50 & 94.35) remain some distance away, with the shorter-term bullish technical theme intact.
  • Yields 2.5-5.0bp lower, curve bull steepens. Post-BoE lows intact.
  • BoE-dated OIS now pricing ~64bp of cuts through year-end vs. ~60bp at the open.
  • Low odds of a follow up cut in March still priced at this stage (~6bp), with the next cut fully discounted through May.
  • We look for the next cut to come in May, although the March decision may be closer than many expect/market prices at this stage.
  • SONIA futures little changed to +6.5, post-BoE highs unchallenged across the strip.
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Gilts continue to outperform German peers, with our best guess being that the latest downbeat snippets surrounding the UK labour market (REC-KPMG Report on Jobs and comments from Bank of America) have supported UK paper today.

  • Little else of note on the UK news front, with focus on the upcoming syndication of the new 4.50% Mar-35 gilt (we look for that to price tomorrow), as well as Tuesday’s scheduled comments from BoE’s Bailey & Mann.
  • Our gilt week ahead publication covers the syndication and previews the comments from Mann in greater detail.
  • Futures +46 at 93.66 (93.13-67 range).
  • Initial support and resistance (92.50 & 94.35) remain some distance away, with the shorter-term bullish technical theme intact.
  • Yields 2.5-5.0bp lower, curve bull steepens. Post-BoE lows intact.
  • BoE-dated OIS now pricing ~64bp of cuts through year-end vs. ~60bp at the open.
  • Low odds of a follow up cut in March still priced at this stage (~6bp), with the next cut fully discounted through May.
  • We look for the next cut to come in May, although the March decision may be closer than many expect/market prices at this stage.
  • SONIA futures little changed to +6.5, post-BoE highs unchallenged across the strip.