INDIA: Consumer Prices Rise 0.71% Y/Y in November (Est: +0.70%)

Gilt Block trade, suggest buyer

• G Z5 ~1.95k at 93.54.

Gilts hold lower and trade wider. vs. Bunds across the curve.

• Futures -37 at 93.50 vs. lows of 93.46. Key resistance at 93.98 held yesterday but bulls remain in technical control.
• Yields 2-4bp higher, curve steepens. 2s10s extends the recovery from October lows after uptrend support held.
• Gilt/Bunds +2bp at 175bp.
• Rumours surrounding a potential leadership challenge within the ruling Labour Party, presence of syndicated gilt supply (albeit I/L, with books now closed) and the bid in equities seem to be the driving factors.
• The former seems to be the key differentiator and driver of gilt widening vs. Bunds, particularly given the proximity to the Budget (November 26) and recent reduction in UK political & fiscal risk premia.
• Note that Health Secretary Streeting played down suggestions that he is planning to challenge PM Starmer, but the furore will nevertheless raise speculation about the PM's position.
• BoE-dated OIS 0.5-2.0 bp less dovish vs. closing levels, showing 20bp of easing for December, 31bp through February, 40bp through March and 51bp through April.
• SONIA futures 0.25-3.0 lower, implied terminal rate pricing continues to hover around 3.30%.
• SFIZ6 and SFIZ5/Z6 registered incremental dovish cycle extremes yesterday.

SX5E (17th July) 5200/4650ps 1x2, bought for 2.7 in ~8.9k.