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/STIR: Bank Of America: Easing Plays Vs. Supply Concerns

GILTS

Bank of America expect “the BoE to stay on hold this week with a 1-7-1 vote, no changes to guidance, and the minutes should reflect the continued need for more confidence, but smaller tail risks.”

  • They go on to note that “front-end pricing appears fair to us, but we suspect the market could turn more bullish again, with market pricing in a higher probability of rate cuts in May and June.”
  • “We, on the other hand, remain convinced the BoE would rather cut faster after August than start cutting in May and June.”
  • “Medium term, our forecasts continue to imply persistent risk premia even as the BoE eventually starts cutting. A key input for real yields is the UK's large stock of net external liabilities, underpinning our sell UKTi/buy OATei view.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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