GILTS: Opening calls

• Gilt calls, 92.33/92.37.

Watch Bund and Tnotes, they are at session lows, but mostly Two way flows.

Estox 50: +0.17%, Dax: +0.18%, CAC: -0.05%, FTSE -0.09%, SMI +0.01%.

BoE-dated OIS flat to 1bp more dovish across liquid contracts.

• 21bp priced for August, 28bp through September, 46bp through November and just under 55bp through year-end.
• We continue to look for cuts in August and November at this stage, with risks skewed dovishly.
• Further softening in the labour market presents the most likely dovish catalyst, with fresh developments on that front likely needed to promote the pricing of a more aggressive easing cycle through year-end.
• Note that market pricing hasn’t been able to move meaningfully beyond 55bp of cuts through December in recent weeks.
• SONIA futures little changed to +3.0.
• Early European trade seems to be shaped by tariff worry, with President Trump noting tariff letters will be sent to countries today (12:00 NY).
• Domestically, focus remains on the fragile fiscal situation with last week’s events underscoring the difficulty of enacting meaningful public spending cuts and increasing the odds of tax hikes in the Autumn (a negative for GDP growth).
• Indeed, weekend press reports note that Chancellor Reeves told ministers that tax increases set to come in the Budget will be more challenging than last year’s decisions.
• There are increasing odds that Reeves will have to hike at least one of the big three taxes (national insurance, income tax & VAT).
• Monthly economic activity data (Friday) headlines this week’s local data calendar, while BoEspeak will come via Breeden on Thursday.