GILTS: Notable Steepening On The Day, Recent Range Extremes Untouched
Gilts are off pullback lows, with an eye on wider moves in core global FI markets.
- Little of note since this morning’s data/auction combination when it comes to UK news flow.
- Futures +12 at 91.62.
- The 20-DMA (91.81) has been breached on a couple of occasions but may be intact come the close.
- Yields 6bp lower to 7.5bp higher, notable twist steepening on the day.
- April 10 low in 10s untouched.
- Weakness in the long end lacks a clear driver, given the lack of news/technical breaks in benchmark yields/curves.
- 10- & 30-Year Tsys now outperform gilts, with the previously covered SLR reform discussions at the U.S. Tsy helping promote that move (note that spreads were already moving that way ahead of the headline).
- Outperformance vs. Bunds, at least intraday, is proving stickier.
- BoE-dated OIS continuing to show ~23bp of cuts for next month, although pricing of cuts through year-end has deepened to ~81bp vs. the ~75bp seen late yesterday.
- SONIA futures flat to +9.5, last week’s highs intact/untouched.
- UK CPI data due tomorrow, click for our full preview.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
May-25 | 4.227 | -23.1 |
Jun-25 | 4.135 | -32.3 |
Aug-25 | 3.942 | -51.7 |
Sep-25 | 3.833 | -62.5 |
Nov-25 | 3.690 | -76.9 |
Dec-25 | 3.642 | -81.6 |
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
