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GILTS: /SWAPS: J.P.Morgan recommend 10-Year swap spread wideners.

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CEEMEABulletUKMarketsFixed Income Bullets

J.P.Morgan recommend 10-Year swap spread wideners.

  • They suggest that relative narrowness in the “10-Year swap spread on valuation frameworks likely reflects a combination of: 1) upcoming 10Y syndicated gilt supply in February with a new gilt Mar35 planned for w/c 10 February, and 2) markets pricing in some uncertainty around increased gilt supply at the March OBR forecast update and DMO remit announcements.”
  • However, they stress that this is “very much a tactical short-term view as the ongoing BoE APF reduction and likely upward skew to gilt issuance expectations should put narrowing pressure on 10Y swap spreads over the medium term.”
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J.P.Morgan recommend 10-Year swap spread wideners.

  • They suggest that relative narrowness in the “10-Year swap spread on valuation frameworks likely reflects a combination of: 1) upcoming 10Y syndicated gilt supply in February with a new gilt Mar35 planned for w/c 10 February, and 2) markets pricing in some uncertainty around increased gilt supply at the March OBR forecast update and DMO remit announcements.”
  • However, they stress that this is “very much a tactical short-term view as the ongoing BoE APF reduction and likely upward skew to gilt issuance expectations should put narrowing pressure on 10Y swap spreads over the medium term.”