GILTS: Bullish Theme Intact, BoE In View
Nov-05 08:22
Gilts edge higher at the open, taking cues from core global FI markets overnight.
- Note that a recovery from overnight lows in equity benchmarks has pushed both TY & Bund futures away from Asia-Pac eyes.
- Gilt futures little changed at 93.62.
- The bullish technical trend remains intact. Initial support and resistance located at 93.15 & 93.98.
- Yields ~1bp lower in a parallel shift across the curve.
- October lows continue to provide initial yield support levels, with only 30s piercing last month’s base yesterday.
- Final services PMI data is due today, but the bulk of the focus remains split between tomorrow’s BoE decision and local fiscal matters.
- On the former, we have characterised our view as 50/50 (when it comes to a cut or a hold), which is more dovish than current market pricing (~7bp of easing).
- We would have more confidence in a cut if the Budget was not coming into view, particularly given the soft food CPI reading in the latest monthly inflation release.
- Our full preview of the decision will be published later today.
- Elsewhere, the NIESR has suggested that the Budget should include GBP50bln of fiscal consolidation, with the aim of building fiscal headroom of ~1.5% of GDP.
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SONIA OPTIONS: Put Spread, Spread
Oct-06 08:20
SFIF6 96.20/96.10ps vs 0NF6 96.30/96.20ps, bought the front for half in 5k.
FRANCE: Lecornu Resigns After Naming Largely Unchanged Government
Oct-06 08:13
French Prime Minister Sébastien Lecornu has presented his resignation to President Emanuel Macron after a broadly unchanged government Lecornu named on Sunday evening was criticised by party leaders from both the right and the left. Bloomberg reports that Lecornu will deliver press remarks in Paris at 10:45 CET, 09:45 BST, 04:45 ET.
- Politico described Lecornu's government as "a sign that the political forces represented in Macron's successive administrations remain broadly the same, despite Lecornu's being the French president's fifth prime minister in less than two years.”
- Lecornu’s resignation comes after a Friday move to rule out using Article 49.3 of the French constitution to pass a budget without a parliamentary vote, and a parallel bid to agree on a ‘non-aggression pact’ between competing parties failed to ease concerns with Socialists.
- Le Monde reports, “Over the weekend, Lecornu sent a letter to the leaders of Macron's centrist camp and LR pleading for unity. "With only a very narrow majority, the government will have to make compromises with other political groups, without abandoning its convictions.”
- Socialist Party leader Olivier Faure said this morning, "The prevailing sentiment is one of dismay ... The reality is that we are witnessing an unprecedented political crisis."
- National Rally President Jordan Bardella said, "There can be no return to stability without a return to the polls and without the dissolution of the Assemblée Nationale,"
- Mathilde Panot of the leftist Insoumise party wrote on X, “we demand the immediate examination of the motion filed by 104 deputies for the impeachment of Emmanuel Macron.”
GOLD: Heading towards $4000.00
Oct-06 08:10
- Despite the Dollar Bid, Gold is still acting as a much better Safer Haven, at a new all time record high, next projection comes at $3987.3 - 2.236 proj of the May 15 - Jun 16 - 30 price swing.
- But the Globe will be fixated on the big Psychological $4000.00 round number.
