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GILTS: Off Early Lows As Impact Of GDP Beat Fades

GILTS
CEEMEABulletUKMarketsFixed Income Bullets

The reaction to the firmer-than-expected headline GDP data weighs on gilts at the open, but the market then recovers from lows.

  • A reminder that we don’t think that today’s release is a gamechanger for the BoE.
  • Market reaction beyond the initial knee-jerk weakness adds some credence to our view.
  • Lower energy prices following U.S. Trump pushing to "start negotiations immediately" to end the war in Ukraine likely providing some background support as well.
  • Futures trade as low as 92.36 before a recovery to 92.60.
  • Yesterday’s low (92.31) went untested. The recent bullish technical cycle in the contract remains in play.
  • Yields 0.5-2.0bp higher, curve flatter.
  • GBP STIRs retrace some of the early hawkish move.
  • ~56bp of further BoE cuts priced through year-end, ~23bp showing through the May MPC, 30bp priced through the June meeting.
  • Little of note on the UK calendar for the remainder of the session, which will leave focus on wider drivers and continued digestion of pre-open developments.
  • Today’s key macro points of note will include U.S. PPI & weekly jobless claims data, tariff headlines and comments surrounding the Russia/Ukraine conflict
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The reaction to the firmer-than-expected headline GDP data weighs on gilts at the open, but the market then recovers from lows.

  • A reminder that we don’t think that today’s release is a gamechanger for the BoE.
  • Market reaction beyond the initial knee-jerk weakness adds some credence to our view.
  • Lower energy prices following U.S. Trump pushing to "start negotiations immediately" to end the war in Ukraine likely providing some background support as well.
  • Futures trade as low as 92.36 before a recovery to 92.60.
  • Yesterday’s low (92.31) went untested. The recent bullish technical cycle in the contract remains in play.
  • Yields 0.5-2.0bp higher, curve flatter.
  • GBP STIRs retrace some of the early hawkish move.
  • ~56bp of further BoE cuts priced through year-end, ~23bp showing through the May MPC, 30bp priced through the June meeting.
  • Little of note on the UK calendar for the remainder of the session, which will leave focus on wider drivers and continued digestion of pre-open developments.
  • Today’s key macro points of note will include U.S. PPI & weekly jobless claims data, tariff headlines and comments surrounding the Russia/Ukraine conflict