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Pill in focus; first supply since the "Growth Plan"

GILTS
  • Gilts have continued the recovery off of yesterday's lows and futures have now breached yesterday's high of 97.38. There is still some way to close the gap to Friday's low of 98.68.
  • The curve is steepening - although 2s10s still remains severely inverted at -28.6bp at writing. This is some way off the -46.2bp lows of yesterday, however.
  • The main event of the day will be an appearing from Huw Pill a the CEPR Barclays Monetary Policy Forum. The event is entitled "Economic and Monetary Policy challenges ahead" - a very appropriate title given recent events! He is due to speak around 14:35BST and we expect his comments to be very consistent with the statement from Bailey yesterday regarding recent market moves. What will be very interesting is any steer he can give on the magnitude of the rate hike he expects is needed in November (he is likely to be one of the swing members on the MPC) and any conclusions he can draw from the government's "Growth Plan" aka fiscal event.
  • This morning will also see the first gilt supply since the Growth Plan announcement with the 0.125% Aug-31 linker on offer for GBP1.2bln. 10-year breakevens have been trading in a huge range over the past couple of days - but appear to have settled at lower levels than prior to last week's MPC meeting and fiscal event.
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