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MNI Gilt Week Ahead: Politics and external events in focus

On the political front, focus is on local elections while external events are likely to be bigger drivers of UK markets this week with little on this week's domestic data calendar and no MPC speakers scheduled.

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  • On the domestic data front, the focus will likely be on politics with local elections due to be held on Thursday 2 May with the Conservatives expected to see some heavy losses (but this is unlikely to be immediately market moving). Instead, UK markets are more likely to be driven by external factors with the FOMC meeting as well as the US ISM and labour market data while Eurozone inflation data are also due for release.
  • On the domestic calendar, outside of the aforementioned politics, it is a light calendar week with only the BRC shop price, BOE money and credit data and final prints of both the manufacturing and services PMIs due. There are also no MPC members scheduled to speak ahead of the May policy decision and publication of the MPR / Minutes.
  • Markets are also likely to start to look ahead to next week’s MPC meeting with very little priced for May (we see a 10% probability of an immediate cut), 9bp of cuts by June (broadly in line with our 30% probability) and 21bp by August (we see a 40% probability) while we see a 20% probability that the first cut is delayed further. Market pricing is therefore relatively close to our view for the first cut at least. A cumulative 45bp is priced by December.
For the full MNI Gilt Week Ahead document which also includes a syndication previews for this week see:

GiltWeekAhead20240429.pdf

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  • On the domestic data front, the focus will likely be on politics with local elections due to be held on Thursday 2 May with the Conservatives expected to see some heavy losses (but this is unlikely to be immediately market moving). Instead, UK markets are more likely to be driven by external factors with the FOMC meeting as well as the US ISM and labour market data while Eurozone inflation data are also due for release.
  • On the domestic calendar, outside of the aforementioned politics, it is a light calendar week with only the BRC shop price, BOE money and credit data and final prints of both the manufacturing and services PMIs due. There are also no MPC members scheduled to speak ahead of the May policy decision and publication of the MPR / Minutes.
  • Markets are also likely to start to look ahead to next week’s MPC meeting with very little priced for May (we see a 10% probability of an immediate cut), 9bp of cuts by June (broadly in line with our 30% probability) and 21bp by August (we see a 40% probability) while we see a 20% probability that the first cut is delayed further. Market pricing is therefore relatively close to our view for the first cut at least. A cumulative 45bp is priced by December.
For the full MNI Gilt Week Ahead document which also includes a syndication previews for this week see:

GiltWeekAhead20240429.pdf