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Light Steepening Seen, CPI & BoE To Dominate This Week

GILTS
HomepageBond Market NewsBulletMarketsFixed Income Bullets

Gilt futures trade around late Friday levels, last -5 at 98.82.

  • Bulls are in control from a technical standpoint.
  • They look for a break of Friday’s high (99.05) to further cement recent gains.
  • Initial firm support is seen at the 20-day EMA, with the June 4 high (97.86) providing some intermediate protection.
  • Cash gilt yields are flat to 1bp lower, as the curve steepens a little. 2s10s sits a little below recent highs.
  • J.P.Morgan have recommend fading the recent curve steepening via tactical 10s/30s flatteners. They point to light long end supply in the coming months, as well as their expectations for GBP STIRs.
  • Local headline flow continues to be dominated by polling woes for PM Sunak and the ruling Conservative party.
  • The BoE will sell GBP600mn of long dated gilts from its APF later today.
  • This week will see focus fall on the latest round of monthly CPI data (Wednesday) and the BoE monetary policy decision (Thursday).
  • CPI data may be more informative for the future path of monetary policy than the MPC decision.
  • The Bloomberg survey median looks for services CPI to slow to +5.5%Y/Y, still notably above the BoE’s forecast (+5.26%).
  • However, we think there may be some downside risks to that releasee.
  • We will publish our full previews of those events in due course.
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Gilt futures trade around late Friday levels, last -5 at 98.82.

  • Bulls are in control from a technical standpoint.
  • They look for a break of Friday’s high (99.05) to further cement recent gains.
  • Initial firm support is seen at the 20-day EMA, with the June 4 high (97.86) providing some intermediate protection.
  • Cash gilt yields are flat to 1bp lower, as the curve steepens a little. 2s10s sits a little below recent highs.
  • J.P.Morgan have recommend fading the recent curve steepening via tactical 10s/30s flatteners. They point to light long end supply in the coming months, as well as their expectations for GBP STIRs.
  • Local headline flow continues to be dominated by polling woes for PM Sunak and the ruling Conservative party.
  • The BoE will sell GBP600mn of long dated gilts from its APF later today.
  • This week will see focus fall on the latest round of monthly CPI data (Wednesday) and the BoE monetary policy decision (Thursday).
  • CPI data may be more informative for the future path of monetary policy than the MPC decision.
  • The Bloomberg survey median looks for services CPI to slow to +5.5%Y/Y, still notably above the BoE’s forecast (+5.26%).
  • However, we think there may be some downside risks to that releasee.
  • We will publish our full previews of those events in due course.