JAPAN: Post-LDP Election, Focus Will Turn To Parliamentary Support
By the evening of Saturday, 4 October, the governing conservative Liberal Democratic Party (LDP) wil...
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BOE: Bailey: Don't focus too much on 30-year gilt yields
Bailey argues that its important not to focus too much on the 30-year gilt rate. Not much funding happens at that level, particularly since the DMO changed its issuance schedule to reduce long issuance.
GILTS: /STIRS: No Reaction To Hawkish Lombardelli View
GBP STIRS & the front end of the gilt curve are unreactive to the initial comments at the BoE TSC hearing.
- Deputy Governor Lombardelli’s hawkish dissent was centred on her outlook for inflation, while both Lombardelli and fellow hawkish dissenter Greene have given some meaningful weighting to food inflation.
- Lombardelli’s comments surrounding neutral rate levels also screen a little hawkish.
- At the other end of the spectrum, dovish dissenter Taylor reaffirms his position at that end of the spectrum (he initially voted for a 50bp cut in August).
- The degree of hawkish repricing witnessed in recent weeks limits follow through from the hawkish comments, ~9bp of easing priced into BoE-dated OIS through year-end.
- SONIA futures flat to +3.0.
- UK yields 1.5-4.0bp lower on the day, at/just off session lows.
BOE: Bailey says that he voted for August cut due to slowing wage growth
Bailey says that he places more emphasis on wage growth: "So I agree with Megan and Clare that I think Alan said as well that we have got the risk on inflation has gone up. I think where I differ a bit is that I think I'm more concerned about the downside risk on the labour market. I think there is more evidence of some weakness in the labour market coming through the pay number. The pay number came in under where we thought it would be based on the May, the May forecast. So I put a bit more emphasis on that downside risk."
