OPTIONS: Expiries for Mar20 NY cut 1000ET (Source DTCC)

• "On the quantity side... not far out of line with what we were expecting. Pay growth went up, but actually not quite as much as we were expecting."
• "At the moment, we spend a lot of time on the pay... in the last Monetary Policy Report, you see in what we published, we do think that it's going to come down during the next year. One of the best anchors we have is the survey that our agents around the country do every year, and they think settlements this year are going to come down."
• "We've used the words gradual and careful. There are two sided risks. We're not providing a steer on we're going to cut... We typically signal policy, but we do take it meeting by meeting. So the one thing I could always predict with total certainty, there's another meeting. So we'll come back in March."
• Reiterates that careful means "that we've got two sided risks, and we are going to approach it in that spirit."

The 0.3bp tail is tighter than the two previous re-openings of the 4.00% Oct-63 Gilt (0.6bps in Feb 2024, 1.3bps in June 2024. 

• Meanwhile, the lowest accepted price of 81.799 exceeded the 81.779 pre-auction mid-price. The price of the Gilt has since moved up to 81.870 at typing.
• The bid-to-cover of 2.80x was a little below the 2.92x and 3.10x seen at the prior two re-openings. 

The German ZEW expectations index rose to 26.0 in February, outperforming a consensus estimate of 20.0, and January's 10.3, indicating some strengthening in sentiment amongst German financial market professionals. The current situation index meanwhile also improved further from December's multi-year low, to -88.5, stronger than consensus of -89.4.

• A wider update to German sentiment will follow on Friday with the February flash PMIs, and the IFO Business Climate index is scheduled for next Monday.
• The ZEW index is based on a survey of "experts from banks, insurance companies and financial departments of selected corporations [which] have been interviewed about their assessments and forecasts for important international financial market data" - so the index can exhibit elevated levels of correlation with German stock indices such as the DAX.