GILTS: Little Changed As Inputs Offset, Syndication Sees Huge Demand

Gilts are little changed on the day.

• Spill over from risk-off Asia-Pac trade centred on the latest developments surrounding U.S. tariffs quickly faded as the broader risk-off move moderated.
• Modest weakness surrounding the book opening of the 4.375% Jan-40 gilt syndicated tap also faded quickly, as bookrunners had previously flagged that the deal would be today’s business.
• Little lasting impact from mixed labour market data, which saw firm private sector wages and soft quantity outcomes. Accuracy of the data remains in question.
• Futures +2 at 91.60. range of 91.51-91.79.
• Initial resistance at the January 17 high (91.96) untested.
• That leaves the bearish technical trend intact in the contract, initial support at the January 16 low (90.68).
• Yields essentially unchanged across the curve.
• 2s10s and 5s30s curves remain below January highs.
• Focus on hedging around pricing of the aforementioned syndication.
• Books topped GBP119bln including JLMs, with the spread set at tight end of the guidance range. Books are now closed.
• BoE-dated OIS shows ~61bp of cuts through ’25 vs. 62bp late yesterday.
• SONIA futures flat to -2.0.
• Macro/Trump policy cues eyed.