BOE: Ramsden looking for more hikes - but there is little to change our view
May-12 06:46
- Ramsden's comments in a recently published Bloomberg interview probably aren't too surprising. Recall that he was one of the four MPC members who had voted for a 50bp hike in February. He said that "we’re not there yet in terms of how far monetary policy has to tighten... I‘m still very, very supportive of the forward guidance that there may well need to be further tightening in the coming months.”
- He also said that “I don’t think we’ve gone far enough yet on bank rate, but I do think that what we’ve already done is having an impact.” and that “Given what we know about the UK labor market, I wouldn’t be surprised if it turned out to be a bit tighter... I think there are upside risks on inflation the medium term.”
- We had written in the MNI BOE Review that we think there will be a 25bp hike in June and probably another in August, but that further hikes will be more questionable as the growth outlook sours (albeit we wouldn't rule out more). Ramsden's comments today don't change our view and we still think that market pricing of 107bp more hikes in 2022 looks excessive (but not out of the realms of possibility).
- The Dec-22 SONIA futures contract opened 6 ticks higher and has since reversed 4 ticks to be 2 ticks up on the day.
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USD: Pushing higher in G10
Apr-12 06:35
- USD is extending gains on the Govie open, DXY hover at session high and the USD test another session high versus the Yen, SEK, ILS, EUR, GBP.
- The kiwi is back to flat after trading in the green overnight, while the AUD is still barely holding onto gains.
- USDJPY eye 125.86 High Jun 5 2015 and a major resistance, next.
DUTCH AUCTION PREVIEW: 0.50% Jul-32 DSL
Apr-12 06:26
On offer today: E1.5-2.5bln of the 0.50% Jul-32 DSL (ISIN: NL0015000RP1).
- Market colour: Shortly after launch, the yield on the new 10-year DSL followed a soft downwards trend troughing at 0.138% on March 1 as the Ukraine crisis escalated into war (43bp below the 15 Feb launch yield). Yields have since followed a strong upwards trajectory to stand around 1.087% at writing. Spreads to bunds widened to over 30bp last week after having traded in a 23-27bp range. However, we have fallen back close to this range in the past couple of session and sit at 27.3bp at the time of writing.
- Timing: Results will be available shortly after the auction closes at 0900 BST / 1000 CEST.
Auction history: Today's auction will see the first reopening of the 0.50% Jul-32 DSL, following its syndicated launch.
| Date | Issued | Avg yield | Price | Pre-auct | Operation |
| Current | 1.087% | ||||
| 15-Feb-22 | E5.956bln | 0.572% | 99.28 | New | Synd |
Previous benchmark auctions: The auction history for the previous 10-year DSL 0% Jul-31 DSL (ISIN: NL00150006U0) is below:
| Date | Issued | Avg yield | Price | Pre-auct | Operation |
| Current | 0.977% | ||||
| Last 3 ave | E2.347bln | -0.022% | |||
| 26-Oct-21 | E2.49bln | 0.014% | 99.86 | 99.80 | Auction |
| 08-Jun-21 | E2.2bln | -0.053% | 100.54 | 100.51 | Auction |
| 11-May-21 | E2.35bln | -0.027% | 100.27 | 100.25 | Auction |
| 09-Feb-21 | E5.99bln | -0.316% | 103.35 | New | Synd |
BUNDS: ALL EYES on US inflation
Apr-12 06:24
- A more subdued overnight session for Bund, with 7k lots traded, but the contract once again gaped lower, with a massive 1,406 ticks drop since the 7th March.
- US 10yr yield is heading above the Greek 10yr, printed a 2.83% versus 2.84% for Greece.
- German 10yr, not yet quoted, is approaching 0.85%, which yesterday equated to 154.57, traded a 154.61 low overnight.
- ALL EYES is on the US CPI, out of Europe sees the German ZEW, but not a market mover.
- Portugal CPI will be final reading.
- SUPPLY: Netherlands EU2.5bn 2032 (equates to 17k Bund), German 2yr Schatz EU5.5bn (Equates to 49.6k Schatz), should keep the lid on the contract.
- SPEAKERS: Fed Brainard
