MNI Gilt Week Ahead - Aug 23 2021: Consultation Week

• Economic data released last week was mixed. Labour market data was largely in line with expectations but the more timely (and less forecast) experimental HMRC payroll data for July showed a continued recovery in the labour market, prompting at least one sell-side analyst to pull forward their expectations of Bank Rate hikes. CPI data (including core) came in 2-3 tenths lower than consensus expectations while retail sales saw negative growth in July (although this was partly due to logistical, shipping and product availability issues rather than just weaker demand).
• Over the past week, short sterling futures have pushed back on expectations of Bank Rate hikes. The first hike is still fully priced in early 2022 but a hike in rates to 0.50% is now not fully priced until early 2023 – a week ago this was around the end of Q3/beginning of Q4 2022. Outside of the PMI data due today, there are no major domestic UK economic releases or central bank speeches due this week.
• Today, the DMO will host its quarterly consultation meetings with both investors and GEMMs. We discussed in our UK Deep Dive publication our expectations for issuance through FQ3 (October to December). We look for the first green gilt to see a 10-12 year maturity, launched via a syndication in September with a 20-30 year green gilt to follow in October.

GiltWeekAhead23082021.pdf