UK DATA: CBI Reported Retail Sales At Cycle Lows
UK CBI volume of sales reported dropped more than expected to -44% in April (vs +2% prior, -25% expected),
- Meanwhile, volume of sales are expected to fall again but at a slower pace next month (-19%).
- CBI reported the downturn is in part due to the earlier timing of Easter, and looking ahead highlight retailers expect sales to remain below seasonal norms. This is following Official ONS retail sales coming in below expectations.
- The survey includes 129 respondents, of which 48 were retailers.
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EQUITIES: EU Bank put seller
SX7E (21st June) 132.5p, sold at 4.20 in 6k.
GILTS: Rallying On Comments From BoE's Mann
Gilts rally in the wake of comments from ex-hawkish BoE dissenter Mann as she explained her reasoning for switching her vote to no change.
- Her comments around discretionary services inflation softening and expectations for slower wage growth will have driven the rally.
- Mann also noted that the market is doing the work for her, so she doesn't need to vote for a cut.
- Her comments leave her on the hawkish side of the BoE spectrum (as was generally expected), but she didn't explicitly say that rate cuts weren't appropriate here, just that markets expect too much.
- Gilt futures last +37 at 99.66 (99.27-99.70 range). Initial resistance seen at 100.05, Friday’s high.
- Cash gilt yields 3-4bp lower., light bull flattening seen.
- The presence of the upcoming GBP3.0bn auction of the 4.50% Jun-28 gilt will be factoring into the light flattening.
- SONIA futures now flat to +5.0, also firming post-Mann.
- BoE-dated OIS shows ~77bp of ’24 cuts after moving below 75bp earlier today.
| BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| May-24 | 5.145 | -4.6 |
| Jun-24 | 5.008 | -18.3 |
| Aug-24 | 4.849 | -34.2 |
| Sep-24 | 4.716 | -47.5 |
| Nov-24 | 4.556 | -63.5 |
| Dec-24 | 4.421 | -77.0 |
FREIGHT: Baltimore Bridge Collapse Could Hit US Autos Imports, Coal Exports
Overnight the Francis Scott Key Bridge in Baltimore, MD collapsed after one of its support structures was hit by the Singapore-flagged container vessel Dali, on its way from the Point Breeze terminal to Colombo, Sri Lanka. The apparent total collapse of the bridge would appear to take the entire Port of Baltimore out of action, given that the strait spanned by the bridge is the only access for shipping from the port into the Chesapeake Bay, in turn leading into the Atlantic Ocean.
- The collapse of the could have an impact on the US economy beyond just the boundaries of the city itself. The Port of Baltimore, while not one of the largest ports in the country in terms of overall tonnage, nor a key hub for trade in oil or gas, is notable in some areas of freight. It is the largest port in the US for the import of ro-ro (roll-on, roll-off) cargo handling autos, light trucks, farm vehicles, and construction machinery as well as imported forest products, aluminium, and sugar.
- On the export side, it is the second-largest port in the US in terms of coal exports, with the US sitting as the fourth-largest coal exporter worldwide in 2022.
Map of Port of Baltimore
Source: AP
