MNI Gilt Week Ahead: 30-year syndication upcoming

• After the key data releases of last week (see MNI UK Inflation and Labour Market Insight) which saw the market reevaluate the number of cuts likely in 2024 (markets removed around 20bp of cuts across the week – although at points had seen larger moves). There are still around 106bp of cuts priced in for the year – around 100bp would be close to the MNI base case that the first cut comes in August with a series of 25bp cuts following at successive meetings. However, there are risks to the first cut happening in either May or November. May to us still looks more likely as a starting point to the cycle than November, and if the Bank did start cutting rates in May it would very likely deliver more than 106bp of cuts this year in our view.
• The domestic highlight this week will see the release of the flash PMI data on Wednesday (which may come too late for the BOE to incorporate into their February MPR forecasts – but are definitely early enough for the MPC to take into account in their deliberations. There are also a number of second tier UK data release due this week – public finance data on Tuesday, XpertHR pay deals in the early hours of Wednesday, CBI data on Wednesday and Thursday and GfK consumer confidence data in the early hours of Friday.
• There are also a number of external events that could drive UK markets this week – most notably the ECB decision and press conference on Thursday – with the degree of push back against early cuts likely to impact markets on a global basis. This week also sees a number of other central banks around the world including the BoJ and Bank of Canada.

GiltWeekAhead20240122.pdf