Off Lows, Fiscal Speculation Continues to Dominate

Gilts have stabilised after the initial pullback which seem to be aided by overnight fiscal speculation.

• To recap, a 2ppt cut to national insurance is set to form the centrepiece of today’s Budget.
• There was some press speculation surrounding the potential for an income tax cut announcement later today, although the latest reports/headlines have pushed back against that idea.
• Consensus seems to be moving towards a pre-election personal income tax cut.
• Our full preview of the budget can be found here.
• Gilt futures are back below 99.00 but stick comfortably within yesterday’s range (98.72-99.22 today).
• Cash gilt yields are 1.5-3.0bp higher with 10s leading the sell off.
• 10s are back above 4.00%, after a brief and limited move below on Tuesday.
• SONIA futures are off lows, flat to -4.0 through the reds.
• BoE-dated OIS shows ~59bp of cuts through ’24, with the major markers in that space sticking to familiar levels.