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Mizuho Recommend Cross-Market Exposure To Short-Term UK Vol

GILTS

Mizuho write “expect GBP rates vol to remain elevated and above other DM rates markets. If the labour market report wasn’t enough, UK public sector pay rises will be negotiated this week, where no outcome looks too promising: above 6.0% pay rises may increase the risk of 2nd round inflation via more pay demands from private sector workers, while an underwhelming deal would mean higher risk of more disruptive strikes. We say: buy short-term GBP rates vol vs EUR and USD.” They chart GBP vs. USD 3m2y IRS Vol as an example.

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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