MNI Gilt Week Ahead - May 4

• It will be a busy week for the UK with the BOE MPC meeting and MPR due for release while local and regional elections will be held across the UK, most notably the Scottish election.
• We published our BOE preview yesterday and the market's main focus is on the tapering decision. Analysts are split on whether the May meeting will be too early for the MPC to pull the trigger on slower purchases or whether a decision will be left until June or August. The MNI Markets team's base case is that the MPC waits until the June meeting, but sounds optimistic enough at this week's meeting to prepare the market for a tapering of gilt purchases when England completes its roadmap out of lockdown.
• In terms of this week's elections, the most significant will be the Scottish election, in which the SNP could potentially gain a majority. This would increase calls for a second Scottish independence referendum but it is by no means certain that the UK government will grant the request for a referendum. Whether Scotland could hold a non-binding advisory election without the UK government's consent remains a hot topic for legal experts. Outside of Scotland, the focus will largely be on the "red wall" areas in the north of England that are traditionally Labour but voted for the Tories in the last General Election. This will be seen as an important gauge of support for the current government. The elections will be held on Thursday with results likely Friday.
• Outside of these main events, the week ahead will also see final PMI data released.

GiltWeekAhead04052021.pdf