GILTS: Off Lows After Syndi Pricing & Wider Stabilsation
Gilts have moved away from lows, with the passage of pricing of the syndicated 5.25% Jan-41 tap (size issued was just above the upper end of our expectations, while pricing was at the tight end of the guidance range) and some stabilisation in wider core global FI markets factoring in over the last couple of hours.
- Next support in futures (90.70) went untested, with the contact basing at 91.21 before a recovery to ~91.50.
- Yields still 0.5-7bp higher, 30s lead the weakness on the day.
- Bears couldn’t force 10-Year yields above the next round number 4.50%, after a ~15bp move off year-to-date lows.
- SONIA futures recover from lows alongside moves further out the curve, last flat to -8.0
- BoE-dated OIS showing ~41.5bp of cuts for the current cycle, with the next 25bp step fully discounted come the end of the June MPC (80% discounted through the end of the April MPC), little changed on the day.
- CPI data is due tomorrow.
- Our macro team notes that there are a number of question marks for the data. The most pressing are 1) when will the survey date be (and what is the impact on air fares) and 2) how much of a rebound there will be from some of the early Black Friday Discounts. In addition to these, accommodation base effects are expected to increase headline CPI (due to weakness in December 2024) while headline CPI is widely expected to see a +0.05ppt contribution from tobacco.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Feb-26 | 3.724 | +0.0 |
Mar-26 | 3.652 | -7.2 |
Apr-26 | 3.525 | -19.9 |
Jun-26 | 3.460 | -26.4 |
Jul-26 | 3.379 | -34.5 |
Sep-26 | 3.345 | -37.9 |
Nov-26 | 3.307 | -41.7 |
Dec-26 | 3.311 | -41.3 |
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AUSSIE 10-YEAR TECHS: (H6) Marked Lower
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.160 @ 15:32 GMT Dec 19
- SUP 1: 95.120 - Low Dec 10
- SUP 2: 95.087 - 2.0% Lower Bollinger Band
- SUP 3: 94.276 - 1.0% 10-dma envelope
Aussie 10-yr futures remain well toward the bottom of the recent range, having taken out all major support levels in the process. With 95.275 cleared, prices are pushing to new contract lows, opening vol-band support through 95.087 and into 94.276. Any recoveries need to break back above 95.900 to signal near-term bullish traction.
AUDUSD TECHS: Corrective Phase Still In Play
- RES 4: 0.6759 High Oct 11 ‘24
- RES 3: 0.6723 High Oct 21 ‘24
- RES 2: 0.6707 High Sep 17 and a key resistance
- RES 1: 0.6661/86 High Dec 16 / 10
- PRICE: 0.6608 @ 15:56 GMT Dec 19
- SUP 1: 0.6593 Low Dec 18
- SUP 2: 0.6566 50-day EMA
- SUP 3: 0.6517 Low Nov 27
- SUP 4: 0.6466/21 Low Nov 26 / 21
The trend condition in AUDUSD remains bullish and the latest pullback appears corrective. The move down is allowing a recent overbought condition to unwind. Support at the 20-day EMA, at 0.6598, has been pierced. The 50-day average is at 0.6566. The area between the two averages represents a key short-term support zone. A resumption of gains would refocus attention on key resistance at 0.6707, the Sep 17 high and bull trigger.
LOOK AHEAD: US Macro Week Ahead: Long-Awaited Q3 GDP Plus Labor Updates
- The week ahead sees a slimmed down data schedule after a particularly busy few weeks, including distorted NFP and CPI reports in the week just gone. There are still some important releases though, with the highlight being the long-awaited “initial” Q3 GDP release on Tuesday.
- This report will replace what would have been the second GDP and the preliminary corporate profits estimates, with the extended tracking window of the Atlanta Fed’s GDPNow pointing to strong real GDP growth of 3.5% annualized after an average 1.6% in 1H25 (-0.65% in Q1 before 3.84% in Q2).
- Expect continued close attention on private demand, best seen by Powell’s preferred PDFP category, which is currently tracking at ~2.4% annualized for similar to the 2.4% averaged in 1H25 (1.9% Q1 before 2.9% in Q2).
- Tuesday also sees updates for the weekly ADP tracker in the four weeks up to Dec 5, getting closer to the reference period for the monthly report, after last week’s further improvement. It’s followed by useful updates for Q4 GDP tracking with durable goods for October and industrial production for both October and November, before the Conference Board consumer survey for December with its closely watched labor differential having stalled at subdued levels but not deteriorated further since September.
- Note as well that Wednesday then sees weekly jobless claims a day early ahead of Christmas Day, with continuing claims capturing the December payrolls reference period. There is currently minimal Fedspeak scheduled and we suspect this will remain the case ahead of Christmas, likely confined to media appearances if any.
