###POV: WILL GILTS FIND SUPPORT IN MARCH? -...>

GILTS: ###POV: WILL GILTS FIND SUPPORT IN MARCH?

- Not taking account of BoE repurchase operations (Stg18.3bln) that start on Mar

12, net cash flow for March will be negative to the tune of Stg16.8bln.

- Will be interesting to see if there is any support to Gilts during March given

the large negative cash flow and if not, could find that once this support is

taken away then Gilts could fall sharply in April.

- One would think though that even if global bonds do sell-off in March, then

the rise in Gilt yields would be less than German Bunds or even USTs. 

- 10-yr Gilt/UST spread is at 132bps, near multi-year high of 138bps, so appears

to have limited upside. However Gilt/Bund spread is at 86bps in bottom 3rd of

its 5-yr range of 41-162bps and shows there is room for some tightening. 

- There are only 3 conventional gilt auctions in March, 5-yr 0.125% 2023, 30-yr

1.50% 2047 and new 10-yr Oct 2028 Gilt on Mar 1, Mar 6 and Mar 15 for a total of

Stg7bln, compared to Gilt redemption for Stg19.5bln (ex BoE) and coupon payment

of Stg4.3bln. Coupon payments are spread out between 1-yr to 20-yrs.

- Risk is Brexit and the upcoming EU summit on March 22/23.