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Second Round Bid Tops Out For Now

GILTS

96.50 capped the second-round rally in gilt futures, with the contract back to 96.30 last.

  • Cash gilts run 5-15bp richer, with bull steepening dominating after the dovish readjustment in BoE pricing post-CPI.
  • That moved did extend further, with pricing re: odds of a hike tomorrow slipping below 50% at one point this morning, before moving back to even odds as of typing.
  • Terminal policy rate pricing lies 24bp above prevailing levels, which means that one further 25bp hike is not fully priced (just).
  • A quick reminder that most sell-side names still look for the BoE to deploy a hike tomorrow, although Goldman Sachs look for no move in rates and now believe that we are at terminal policy rate levels.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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