GILT AUCTION PREVIEW: On offer next week

Latest from the Guardian:

• "The Treasury is considering a new tax on the sale of homes worth more than £500,000 as a step towards a radical overhaul of stamp duty and council tax, the Guardian has been told".
• "As Rachel Reeves prepares the ground for tax rises in this autumn’s budget, senior ministers have tasked officials to study how a new “proportional” property tax could be implemented and model its impact before reporting back to ministers, who have been briefed on the proposals".
• "Officials are initially examining a potential national property tax, which would replace stamp duty on owner-occupied homes, sources said. They are also studying whether, after the national tax, a local property tax could then replace council tax in the medium term in an effort to repair battered local authority finances".
• "No final decisions have been made. A national tax could be implemented during this parliament, while it is understood an overhaul of council tax would take longer, at least requiring Labour to win a second term in office."

• Treasury futures trade steady to mixed - at/near lows after NAHB Housing Market Index decline.
• Currently, Sep'25 10Y contract trades steady at 111-19 vs. 111-18.5 early overnight low, 10Y yield +.0097 at 4.3257. Curves mildly flatter: 2s10s -.052 at 56.281, 5s30s -.154 at 107.879.
• No more data ahead, Fed speak on tap with Fed VC Bowman interview on Bbg TV at 1245ET

An uptick in benchmark global equity index futures through the opening bell on Wall Street provides some fresh pressure for core global FI markets before stalling, while some offset came from a downtick in oil.

• Gilt futures have pierced previously flagged Friday lows, exposing next support at 90.59. Yields ~1.5bp higher across the UK curve. 10s hit the highest level since late May (4.715% last). Next upside target is the 29 May high (4.765%). 50-Year yields pierce Friday’s cycle high, to trade less than 4bp below the psychological 5.00% level.
• TY futures test Asia-Pac lows at typing, but remain above Friday’s worst levels. Yields little changed to 1bp higher across the U.S. curve.
• Bunds are off session lows, curve bull flattens still. A reminder that Friday’s bear steepening set the tone for wider core global FI, but was more reflective of longer run headwinds for Bunds than new news.