GILTS: Pulling Back Alongside Peers, Still Outperforming Post-Bailey
Gilts also pull back given the weakness in wider core global FI markets, with U.S. data weighing during the NY morning.
- Futures never got anywhere near closing yesterday’s move lower and have traded as low as 98.15. Contract last +17 at 98.25.
- The bearish technical threat in the contract remains evident despite today’s shallow uptick, although the prospect of a swifter BoE rate cutting cycle could change things.
- Yesterday’s low (97.97) provides initial support, while bulls really need to overcome the Oct 1 high (99.47) to start turning the technical tide more in their favour.
- Yields 4.5bp lower to 1bp higher, curve twist steepens.
- 10s still 6bp tighter vs. Bunds after Bailey's dovish comments, reversing some of the recent widening which resulted in fresh '24 wides for the spread on Wednesday.
- Comments from BoE’s Pill due tomorrow, see recent STIR comment for greater colour on that event.
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GILT AUCTION PREVIEW: On offer next week
The DMO has announced it will be looking to sell GBP900mln of the 0.625% Mar-45 linker (ISIN: GB00BMF9LH90) at its auction next Tuesday, September 10.
GERMANY: State Elections-Analyst Views
The German states of Thuringia and Saxony held elections to their regional legislatures (Landtags) on 1 September. With strong gains recorded for parties from both the far-right and far-left, the results have garnered national and international attention.
In the PDF below we highlight some of the key views from analysts following the elections on what the wider political and macro implications of the election could be:
