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FRANCE T-BILL AUCTION PREVIEW

E5.3-6.5bln of BTFs on offer next week

GILTS

2s/10s now flattest since 12/05

SHORT-STERLING OPTIONS

Call spread buyer

SILVER TECHS

Needle Still Points South

BOE
BOE: Re-Run: POV: BOE RATE HIKE NAILED ON, EYES ON R*
-MNI'S PINCH model sees the likelihood of a 25bps hike at comfortably over 90%,
leaving any market reaction a function of the MPC vote split and the publication
of r* (on the condition that the rate hike is delivered in the first place).
-The publication of r* may complicate matters. Firstly, it's likely to detail a
range of rates (rather than a specific level) and secondly, the MPC may stress
that its assessment is fluid and will change over time, meaning r* is subject to
economic developments over the forecast horizon - hardly the clear cut policy
message some participants expect.
-Hawkish: Unanimous 9-0 vote to hike twinned with a nominal equilibrium bank
rate range toward the upper end of the previously cited 1-3% band.
-Neutral: A hike with Cunliffe the sole dissenter and a cloudy nominal
equilibrium bank rate range as wide as 1-3%.
-Dovish: A split vote of 7-2, or even 6-3 (particularly if Carney is in the
minority), would drill yields and GBP lower. This would be compounded by a
nominal equilibrium bank rate range estimate toward 1.5-2.0%.