GILTS: Back From Highs After Soft Auction
Sep-16 2025 09:29
{GB} GILTS: Soft demand at the latest 15-Year auction sees gilts away from session highs.
- Futures back to ~91.50.
- A bullish cycle remains in play. Initial resistance at 91.82. Initial support at 90.65.
- Yields 1.5bp higher to 0.5bp lower, curve twist flattens.
- Modest hawkish adjustment in GBP STIRs, SONIA futures flat to -1.0, BoE-dated OIS pricing ~7.5bp of cuts through year-end, aided by the qauntiy side of the labour market readings.
- We don’t think this morning’s data will be gamechanger for the BoE, particularly with wage data slightly softer than expected at this early stage in the Q3 cycle (see our earlier run of post-data bullets for more colour).
- A reminder that we have CPI data tomorrow ahead of the BoE decision on Thursday (full CPI preview Hidden PDF).
- Focus following Thursday’s BoE decision is likely to fall on the QT announcement for 25/26, with consensus looking for no change in Bank Rate.
- We argue that either active gilt sales continuing at their current pace or being suspended completely would be the optimal position for the market.
- U.S. President Trump’s state visit is set to provide headlines over the next 48 hours, with U.S. firms outlining increased investment intentions re: the UK in recent days.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Sep-25 | 3.976 | +0.9 |
Nov-25 | 3.935 | -3.2 |
Dec-25 | 3.893 | -7.4 |
Feb-26 | 3.786 | -18.1 |
Mar-26 | 3.754 | -21.4 |
Apr-26 | 3.683 | -28.4 |
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Historical bullets
AUSSIE 10-YEAR TECHS: (U5) Follows Fade in Treasuries
Aug-15 2025 22:15
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.710 @ 15:17 BST Aug 15
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures received a boost from the US Treasury rally that followed both the recent poor NFP print as well as Tuesday’s inflation number. While this impact faded into the close of the week, 10-year futures remain toward the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
FOREX: USD Index Pinned to 50-dma as Putin Shakes Hands with Trump
Aug-15 2025 20:49
- USD slipped against all others Friday, with a poor set of retail sales and Uni of Michigan sentiment numbers meeting a higher-than-expected import price index to further stimulate concerns over a stagflarionary phase in the US economy. The USD Index trades either side of the 50-dma which, notably, has begun to flatten out after maintaining a solid downtrend throughout 2025.
- JPY is the strongest currency in G10, extending the breakout and bearish conclusion of the consolidation phase in USD/JPY. Recent weakness puts the price through support drawn off the early August lows as well as 146.71, a key retracement. Price action this week marks a full reversal of the previously overbought condition, keeping the downside argument in focus.
- Anticipation ahead of the Putin-Trump meeting has reached fever pitch. Footage showing the Presidents shaking hands in Alaska has helped ease concerns over a hostile meeting, but it's the outcomes that will matter to markets - particularly as equities hold at alltime highs. Any signs of progress toward a ceasefire would be warmly received by risk sentiment - although both Trump and Putin cautioned against a optimistic outcome in comments to press.
- We noted earlier in the week the pressure building on USD/HKD, with price action not matching the pattern of HKMA intervention. That move extended overnight, and is still building at typing, putting spot down to new pullback lows of 7.8119 shortly after the European open. Overnight swap rates have surged further still Friday (hitting 1.7% at typing), well ahead of the 0.3% prevailing rate mid-week and should continue to support a recovery in HIBOR fixes ahead. Today's 1m HIBOR fixed higher by 41bps, hitting 1.45% for the highest fix since mid-May. It's these factors that should work against the HKD carry trade (selling HKD, buying USD), evident in the further tightening of the HKD forward discount today: down 975 points from as high as 1270 this month.
- Focus in the coming week shifts to Jackson Hole and Powell's comments on Friday. With the September meeting still in flux - any conviction toward tipping the board toward a rate cut at the next FOMC will be carefully watched, but it's a hawkish outturn that could be more consequential for markets, as OIS prices a near 90% chance of easing on September 17th.
MNI: US TSY TICS NET FLOWS IN JUN +$77.8B
Aug-15 2025 20:00
- MNI: US TSY TICS NET FLOWS IN JUN +$77.8B
- US TSY TICS NET L-T FLOWS IN JUN +$150.8B
