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GILTS: Underpinned By Offshore Drivers, Tender Sees Strong Demand

GILTS
CEEMEABulletUKMarketsFixed Income Bullets

{GB} GILTS: Gilts remained underpinned, with the post-Fed recovery in core global FI markets and softer-than-expected European GDP data driving this morning’s rally.

  • Futures +26 at 92.47 vs. highs of 92.50.
  • The technical setup in futures remains unchanged, with the contract experiencing a short-term bullish correction within a longer run bearish trend.
  • Initial support and resistance at 91.52/92.68.
  • Yields 3.5-5.0bp lower, 10s lead the bid.
  • 2s10s and 5s30s curve steepening looks to have halted for now.
  • Fresh dovish repricing in the short end and or fresh issuance/fiscal risks are probably required to generate a meaningful extension of the steepening trend.
  • Strong demand at the GBP1.5bln tender offer of the 0.125% Jan-26 gilt, cover topped 5.00x and the tailed narrowed vs. the prior sale, with demand evident despite the ongoing richness of the line (the line still looks overvalued even when accounting for its low coupon).
  • GBP STIR pricing is relatively sticky around ~70bp of cuts through year-end.
  • SONIA futures flat to +3.0.
  • We have suggested that the market-implied rate cut profile still seems flat, despite some near-term hawkish risks.
  • Little of note on the UK data calendar for the remainder of the week, which will leave much of the focus on cross-market cues and macro events.
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{GB} GILTS: Gilts remained underpinned, with the post-Fed recovery in core global FI markets and softer-than-expected European GDP data driving this morning’s rally.

  • Futures +26 at 92.47 vs. highs of 92.50.
  • The technical setup in futures remains unchanged, with the contract experiencing a short-term bullish correction within a longer run bearish trend.
  • Initial support and resistance at 91.52/92.68.
  • Yields 3.5-5.0bp lower, 10s lead the bid.
  • 2s10s and 5s30s curve steepening looks to have halted for now.
  • Fresh dovish repricing in the short end and or fresh issuance/fiscal risks are probably required to generate a meaningful extension of the steepening trend.
  • Strong demand at the GBP1.5bln tender offer of the 0.125% Jan-26 gilt, cover topped 5.00x and the tailed narrowed vs. the prior sale, with demand evident despite the ongoing richness of the line (the line still looks overvalued even when accounting for its low coupon).
  • GBP STIR pricing is relatively sticky around ~70bp of cuts through year-end.
  • SONIA futures flat to +3.0.
  • We have suggested that the market-implied rate cut profile still seems flat, despite some near-term hawkish risks.
  • Little of note on the UK data calendar for the remainder of the week, which will leave much of the focus on cross-market cues and macro events.