We don't know how much of an adjustment the...>

GILTS: We don't know how much of an adjustment the DMO will make to the

financing remit tomorrow morning. Normally an adjustment to the remit would be

accompanied by either a Budget, updated OBR forecasts or the release of the

final outturn of borrowing for the prior fiscal year. However, with a Budget

postponed until after the election and the OBR judging last week that it would

not be appropriate to release new fiscal forecasts during an election campaign,

we will see the DMO update its remit independently.

- We note that borrowing is above where the OBR had expected so far this fiscal

year. In its last Monthly Public Finance Release the OBR said that "Our restated

March forecast was for a Stg7.2 billion full-year rise in borrowing in 2019-20,

so meeting that forecast would require borrowing to match last year's over the

second half of the year." Although the OBR warn against extrapolating these

numbers, we think it is safe to assume that the remit will be revised higher.

- However, an increase in the financing remit does not mean that the gilt remit

will necessarily increase. The DMO tends to prefer to make small adjustments to

the stock of T-bills first so we may see only minor changes to the gilt remit.