MNI Gilt Week Ahead: Will Bailey give an R* Estimate?

• Markets saw another week of big moves last week with the Sep-23 SONIA futures contract ending the week 29.5 ticks lower, 2-year gilt yields 24.7bp higher on the week while 10-year gilt yields were 16bp higher. The moves occurred after SONIA futures / gilts hit a high early on Wednesday afternoon with the downside momentum exacerbated on Friday by a strong US employment report.
• There are two domestic highlights for us in the week ahead. The first is a speech by Bank of England Governor Andrew Bailey on Tuesday at 18:00BST which is entitled “The policy landscape: structural change, global R * and the missing-investment puzzle”. We look at what other MPC members have said about R* in the recent past.
• The other highlight of the week is likely to be the release of May activity data on Wednesday at 7:00BST.
• We talk through the other MPC and economic data events for the week.
• Politics will of course continue to be on the agenda, with the race for the new Prime Minister and Conservative Party leader likely to continue to dominate headlines. We look at the likely timeline for the leadership contest.

GiltWeekAhead20220711.pdf