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GILTS
Little in the way of notable concession seen ahead of today’s auction, with the DMO set to sell GBP3.75bln of the 4.625% Jan-34 gilt.
- 2s10s is little changed on the week, with hawkish BoE/Fed repricing keeping the front end under pressure.
- The 5-/10-/20-Year butterfly may provide a more enticing opportunity for those looking for long 10-Year RV plays, with 10s operating around multi-month cheaps on the structure.
- This will be the final auction of the current on-the-run 10-year gilt, which should promote a degree of baseline demand.
- An issuance gap for conventional 10s is then expected until the launch of a new 10-year via syndication (we pencil in the W/C 10 June for the syndication). This issuance gap for 10s, coupled with issuance of the 4.125% Jul-29 & 4.75% Oct-43 lines later in May, could promote a degree of 10-Year outperformance.
Fig. 1: UK 5-/10-/20-Year Butterfly (bp)
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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