OPTIONS: Expiries for Nov20 NY cut 1000ET (Source DTCC)

SX5E (19th Dec) 5200/4300ps, bought for 27.1 in 4.25k.

• The ILTR take was GBP3.829bln - below last week's GBP6.344bln.
• This means a net increase of GBP3.189bln to a record GBP47.163bln (GBP5.004bln net addition last week - the highest level since the week of the first Covid lockdown).
• All bids were accepted by the BOE with no increase in clearing spreads above the minimum levels.
• STR usage saw a relatively small pickup of GBP1.375bln to GBP81.837bln on Thursday. This followed two weeks of reducing usage (falls in 3/4 of the past weeks) and remains below the record take up seen three weeks ago of GBP87.149bln.
• Overall, BOE repo balances with last week's two programmes were at a new record high for the week of GBP125.8bln (previous high was GBP121.508bln 3 weeks ago).

The 10-year Gilt/Bund spread is 0.5bps tighter at ~192bps, approaching the September 2024 closing low of 191.9bps. Gilts see slightly more outperformance further out the curve though, with the 30-year Gilt/Bund spread 1bp narrower at 213bps. Both the UK and German curves have bull flattened on the session. 

• This morning’s UK September public sector finance data was better than expected (PSNB at GBP20.2bln vs 20.8bln cons), contributing to today's moves in Gilt yields. However, September PSNBex was still GBP0.1bln higher than the OBR’s forecast. The current YTD tracking error with the OBR has fallen, but remains at GBP7.2bln.
• Today’s 1.50% Jul-53 Green Gilt auction was soft, with another 0.8bp tail and the lowest accepted price below the pre-auction mid.
• The impact on Gilt futures was limited though. Futures are currently +18 ticks at 92.85, off opening highs of 92.92. A bull cycle remains intact, with initial resistance at last Friday's 93.17 high. This shields the 1.236 proj of the Sep 3 - 11 - 26 price swing at 93.30.
• Bund futures are +14 ticks at 130.07. Small resistance remains at 130.18, with better seen at Friday’s 130.59 high.
• Germany sold Green Bobl/Bunds this morning.
• 10-year EGB spreads to Bunds are biased up to 1bp wider, with European equity futures down 0.2%. Finland will sell 7/10-year RFGBs at 1100BST, while Estonia is holding a E500mln syndicated tap today.
• Eurozone Q2 fiscal data wasn’t a market mover. We’ll provide more commentary on that in due course.
• We don’t expect much from today’s ECB/BOE speakers, with regional focus on tomorrow’s UK CPI report.