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Stabilising After Yesterday’s Sell Off, ‘27 Supply Due

GILTS
HomepageBond Market NewsBulletMarketsFixed Income Bullets

Gilts rally after core global peers regained some poise overnight. The rally fails to test 97.00 in futures, leaving the contract at 96.82 last.

  • Yesterday’s sell off deepens the bearish technical threat. Bulls need to retake yesterday’s high (97.43), Meanwhile, a break of yesterday’s low would expose support at 96.25, a Fibonacci retracement.
  • Yields are 1.0-2.5bp lower across the curve, bull flattening.
  • This comes after yesterday’s steepening saw 2s10s close above 0bp for the first time since May ’23. The April 5 ’23 high (11.4bp) is the next target on that curve.
  • 5s30s hit a fresh multi-month high on Monday but failed to challenge YtD highs.
  • BRC shop price index data showed the shallowest Y/Y rise since late ’21, +0.2%.
  • Still, the report noted that “the latest results reveal a slowdown in consumer optimism compared to recent months.” The post-election trajectory in confidence will be worth watching.
  • GBP4bn of Mar-27 gilt supply is due from the DMO this morning.

Fig. 1: UK 2-/10-Year Yield Curve (bp)

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Gilts rally after core global peers regained some poise overnight. The rally fails to test 97.00 in futures, leaving the contract at 96.82 last.

  • Yesterday’s sell off deepens the bearish technical threat. Bulls need to retake yesterday’s high (97.43), Meanwhile, a break of yesterday’s low would expose support at 96.25, a Fibonacci retracement.
  • Yields are 1.0-2.5bp lower across the curve, bull flattening.
  • This comes after yesterday’s steepening saw 2s10s close above 0bp for the first time since May ’23. The April 5 ’23 high (11.4bp) is the next target on that curve.
  • 5s30s hit a fresh multi-month high on Monday but failed to challenge YtD highs.
  • BRC shop price index data showed the shallowest Y/Y rise since late ’21, +0.2%.
  • Still, the report noted that “the latest results reveal a slowdown in consumer optimism compared to recent months.” The post-election trajectory in confidence will be worth watching.
  • GBP4bn of Mar-27 gilt supply is due from the DMO this morning.

Fig. 1: UK 2-/10-Year Yield Curve (bp)

Keep reading...Show less