GILTS: Recovering But Yields Still Comfortably Higher Than Thursday
Nov-17 10:30
Gilts have rallied but yields are still 5-14bp above Thursday’s closing levels after Chancellor Reeves’ apparent u-turn when it comes to raising income taxes increased the fiscal risk premium in gilts.
- Weekend press reports were focused on smaller taxes and opinion pieces surrounding fiscal policy, nothing to really move the market.
- Futures +12 at 92.27.
- Initial support of note located at 91.82, while bulls ultimately need to close Friday’s opening gap lower (~93.35) to start turning the technical tide back in their favour.
- Yields 2.5-3.5bp lower, curve steepening.
- 2s10s trades less than 1bp from its October closing high (located at 74.26bp), while 5s30s is a little over 1bp off its October closing high (located at 140.12bp).
- Dovish adjustment in GBP STIRs given the move further out the curve. SONIA futures flat to +3.0. BoE-dated OIS little changed to 2bp more dovish on the day, showing 18bp of easing for December, 26.5bp through February and 34bp through March.
- BoE MPC member Mann will speak this afternoon (13:20 London). We have previously suggested that speeches from MPC members outside of Governor Bailey are likely to have less impact for markets in the run up to the December decision (given their entrenched views).
- CPI data (Wednesday) headlines this week’s UK calendar (see our gilt Week Ahead & morning STIR bullet for more on that release, our full preview will cross in due course).
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Dec-25 | 3.788 | -18.2 |
Feb-26 | 3.704 | -26.6 |
Mar-26 | 3.628 | -34.2 |
Apr-26 | 3.537 | -43.3 |
Jun-26 | 3.499 | -47.1 |
Jul-26 | 3.457 | -51.3 |
Sep-26 | 3.445 | -52.5 |
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LOOK AHEAD: US Week Ahead Headlined By Delayed CPI Report On Friday
Oct-17 20:51
- The September US CPI report will be released on Friday, delayed amidst the government shutdown but with the BLS making a special exception on social security payment considerations.
- Bloomberg consensus looks for headline CPI inflation at a rounded 0.4% M/M after 0.38% back in August and for Y/Y inflation to firm two tenths to 3.1% for what would be its highest since May 2024.
- Core inflation is seen at a rounded 0.3% M/M after 0.35% in August (exceeding the median unrounded estimate of 0.31%) and 0.32% in July. It’s expected to see core CPI inflation hold at 3.1% Y/Y having in August increased to its highest since February.
- Core details should see focus on both goods and services angles: underlying goods inflation has clearly firmed in recent months on tariff pressures although the median increase has currently seen a peak back in June, whilst services will be watched for any spillover after some strong recent non-housing readings.
- The report will come within the FOMC blackout period ahead of the Oct 28-29 decision, with a 25bp cut fully priced and likely needing a large surprise to alter this.
- As for broader inflation details, Fed Chair Powell this week confusingly suggested that we will have the September PPI report but the BLS had previously said “No other releases will be rescheduled or produced until the resumption of regular government services”.
US DATA: Latest Jobless Claims Estimates During The Shutdown
Oct-17 20:30
As noted earlier, MNI estimates initial jobless claims at a seasonally adjusted 218k in the week to Oct 11 and continuing claims at a seasonally adjusted 1929k in the week to Oct 4.
- To give a better idea of sensitivity around these estimates, which rely on estimates for some missing states, we note the below analyst estimates:
- Goldman Sachs have a central estimate of 217k for initial claims in a range of 211-225k, whilst they see continuing claims at 1917k in a range of 1885-1930k.
- JPMorgan meanwhile also see 217k for initial claims whilst they see continuing claims as having held constant at 1927k.
NATGAS: Venture Global in Talks with Ukraine for more LNG Deliveries, Reuters
Oct-17 20:28
Ukraine is seeking more cargoes from Venture’s Plaquemines facility as the embattled nation approaches the winter heating season, according to Reuters sources
- Venture is in talks with Ukraine’s DTEK to procure more LNG cargoes after a year of gas infrastructure attacks by the Russians.
- Venture Global CEO Michael Sabel met with President Volodymyr Zelenskiy on Thursday October 16.
- DTEK signed an agreement in 2024 for an undisclosed amount of LNG from the facility, as well as 2 mtpa from Calcasieu Pass Phase 2 currently under construction.
- Plaquemines currently has spare capacity to deliver more cargoes to Ukraine on the spot market, per Reuters.
- Plaquemines now sends out the second highest LNG volume in the US, with feedgas demand averaging 3.45 bcf/d according to MNI figures.
