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Will the govt's cost of living plan come today?

  • The front-end of the gilt curve is moving in line with Schatz while 10y gilts are moving in line with USTs.
  • There are no notable UK data releases or BOE speakers until next Tuesday (the day that will also see the DMO announce its gilt operations calendar for FQ3 as well as confirm that choice of gilt for the June syndication).
  • However, there is focus on whether the government will more explicitly outline its cost of living strategy today. There have been many political commentators pointing out that the government may announce the strategy shortly after the negative headlines of the Gray report and the testimony from the Ofgem head that energy bills are likely to rise around 40-45% in the new price cap increase in October. With parliament in recess from tomorrow until 6 June, today may be the last chance for the government to try and change the topic of conversation ahead of next week's Jubilee long weekend.
  • Looking at the gilt curve, 2-year gilts are around 40bp off their April highs, while 10y yields are around 20bp below the cycle high of 9 May and 15+ year yields around 15bp off cycle highs. Having said that, we are still over 20bp off the low yields seen on 12 May.

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