GILTS: Global Cues Still Dominate
Mar-06 15:50
Global cues dominate over the past few hours.
- U.S. data helped the contract to fresh session highs, before a modest hawkish reaction to the latest ECB decision and potential for deeper USMCA tariff delays added some fresh pressure.
- Gilts back to 91.35 vs. highs of 91.93.
- Bulls need to overcome yesterday’s high (92.41), while bears will look to force a break of session lows (90.71) to strengthen their technical dominance (with the caveat that the contract is in oversold territory).
- 10 continue to outperform Bunds, narrowing by ~6bp on the day, last ~183.5bp. Little in the way of support until the next cluster around 175bp.
- GBP STIRs continue to track wider swings in core global FI markets.
- BoE-dated OIS shows 47.5bp of cuts priced through December, trading in a 44-52bp range today.
- Further forwards, 18bp of cuts are priced through May, 22.5bp through June and 34.5bp through August.
- SONIA futures flat to -2.0.
- BoE hawk-turned-dove Mann reiterated her thoughts, noting that “larger cuts "more effectively communicate the stance of policy". Still, we aren’t any closer to knowing whether or not she will vote for another 50bp cut, or whether she will switch to 25bp in a couple of weeks.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.459 | +0.4 |
May-25 | 4.277 | -17.8 |
Jun-25 | 4.232 | -22.3 |
Aug-25 | 4.108 | -34.7 |
Sep-25 | 4.075 | -38.0 |
Nov-25 | 3.997 | -45.8 |
Dec-25 | 3.981 | -47.4 |
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GBP: Posts Full Reversal of Tariff Gap, Nears Key Resistance
Feb-04 15:47
- G10 FX gaining against the USD in recent trade, which is extending slippage into the London close, largely stemming from Trump's hardline approach on Iran. This drove the push lower in the front-end of the US yield curve and, in turn, has pressured the greenback.
- With spot GBP/USD through the overnight high at 1.2455, markets are now testing horizontal resistance layered between 1.2471-76 to confirm a full reversal of the weakness posted since the reopening of trade on Sunday evening.
- Strength today also narrows the gap with the 50-dma - a level that held as firm resistance in late January and now crosses at 1.2505. This level could prove key into the BoE decision on Thursday. We wrote earlier today on the growing expectations that the BoE will edge up their estimate of the neutral rate as part of Thursday's policy report - confirmation of which could work further against easing expectations this year - and strengthen GBP.
PIPELINE: Corporate Bond Issuance Update: $3B EIB WNG 10Y Priced
Feb-04 15:38
- Date $MM Issuer (Priced *, Launch #)
- 02/04 $3B *EIB WNG 10Y +60
- 02/04 $1.5B #BNG Bank 3Y SOFR+37
- 02/04 $1B KFW 4% 2026 TAP SOFR+20
- 02/04 $Benchmark IDA 10Y SOFR+63a
- 02/04 $Benchmark Altria 3Y +95a, 10Y +145a
- 02/04 $Benchmark Valero Energy 5Y +115a
- 02/04 $Benchmark GATX 10Y +125a, 2054 Tap +140a
- 02/04 $Benchmark BNY Mellon 6NC5 +85, 6NC5 SOFR
- 02/04 $Benchmark National Fuel Gas 5Y +145a, 10Y +175a
- 02/04 $Benchmark National Rural Utilities 3Y +80a. 5Y +90a
- 02/04 $Benchmark NextEra Capital 30.5NC5.25, 30.5NC10.25
- 02/04 $Benchmark L-Bank 5Y SOFR+47a (2Y SOFR dropped)
- 02/04 $Benchmark Foundry JV 6Y +155a, 8Y +180a, 11Y +190a, 12Y +195a, 14Y +205a
OPTIONS: Expiries for Feb05 NY cut 1000ET (Source DTCC)
Feb-04 15:38
- EUR/USD: $1.0300-05(E1.4bln), $1.0315-35(E1.8bln), $1.0400(E570mln), $1.0500(E1.4bln)
- USD/JPY: Y153.15-25($2.0bln)
- USD/CAD: C$1.4240($954mln), C$1.4500($710mln), C$1.4530($847mln), C$1.4600($1.5bln)
