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Soft 40-year gilt auction

GILT AUCTION RESULTS
  • A relatively wide tail at the 40-year 4.00% Oct-63 gilt auction with the tail of 1.3bp double February's 0.6bp. This led to the LAP of 89.630 coming in notably below the pre-auction mid-price of 89.784 and lower than levels seen for around 90 minutes (and the yield on the secondary market mids have risen by around 1bp since the auction results were published).
  • Gilt futures knee jerk down 9 ticks on the results, again to their lowest levels in almost 90 minutes.
  • The bid-to-cover of 3.10x was decent, so there was a decent quantity of bids at the auction - but the poor quality of those bids is what is driving the reaction here.

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