POLAND: Sell-Side Analysts Don't See Much Fiscal Consolidation In 2026 Budget
Below we summarise sell-side views published in reaction to the draft 2026 state budget approved by ...
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GILTS: Tender Demand & Eyes On Month-End Underpin Rally
Gilts remain underpinned.
- Late Tuesday cues from Tsys provided support at the open, with solid demand at the GBP300mn tender of the 3.75% Jul-52 gilt then helping underpin after a pullback into the bidding deadline.
- A reminder that month-end index extension projections for gilts are sizeable, which could also be factoring into today’s rally.
- Futures have pierced resistance at the 20-day EMA (91.82). Bulls now eye the July 22 high (92.15). highs of 91.97 seen thus far. To the downside, well-defined key support comes in at the July 18 low (91.08).
- Benchmark yields 3-4bp lower, curve marginally flatter
- 2s10s and 5s30s remain in fairly close proximity to 75bp and 140bp, respectively, trading back from ’25 highs, but consolidating the bulk of the year-to-date steepening.
- GBP STIR pricing takes cues from the rally in the long end. SONIA futures flat to +1.5, BoE-dated OIS little changed, showing 46bp of easing through year-end, with ~90% odds of an August cut priced.
- Little of note on the UK calendar for the remainder of today, which will leave focus on broader headline flow, as well as the U.S. quarterly refunding announcement and GDP data ahead of the FOMC decision.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Aug-25 | 3.994 | -22.3 |
Sep-25 | 3.960 | -25.7 |
Nov-25 | 3.808 | -40.9 |
Dec-25 | 3.754 | -46.3 |
Feb-26 | 3.647 | -57.0 |
Mar-26 | 3.611 | -60.6 |
EUROPEAN INFLATION: Belgium HICP Decelerates, Lower CPI Appears Broad-Based
Belgium HICP inflation decelerated to 2.6%Y/Y in July according to the Statbel flash estimate (June 2.8%). National CPI (non-HICP) inflation meanwhile also decelerated, to 1.92% Y/Y from 2.15% for the first sub-2% reading since January 2024.
- Sticking to the non-HICP details, core CPI (ex energy & unprocessed food) was 2.36% Y/Y (2.63% June), driven by services inflation falling to 3.27% (3.57% June).
- "Regarding energy, inflation stands at -1.86% this month, compared to -1.75% in June and -1.10% in May [...] Food inflation (including alcoholic beverages) rose 2.98% this month, compared to 3.14% the previous month", Statbel comments.
- For context, Belgium makes up 3.9% of the total Eurozone HICP basket in 2025.
EGBS: Bund Futures Look Through Heavy Morning Of Econ Data
Despite an extremely heavy morning of regional economic data, Bund futures have traded in a contained 33 tick range, currently unchanged at 129.66. Early rallies were limited by this morning’s heavy Italian supply, which has now passed. Broader macro focus remains on today’s US refunding announcement at 1330BST and the FOMC decision this evening.
- Initial resistance in Bunds is the 20-day EMA at 129.92, while key support and the bear trigger is not seen till 128.84. In the short-term, risks to Bunds may be tilted to the upside due to growth concerns stemming from the EU-US trade agreement, alongside potential front-running of supportive month-end extensions.
- German yields are up to 2bps lower, with the 10-year tenor outperforming. 10-year EGB spreads to Bunds are little changed.
- Eurozone GDP printed 0.1% Q/Q in Q2, slightly stronger than consensus of 0.0% and slightly softer than the ECB's 0.2% staff projection. It was below Q1's outsized 0.6%. July EC economic confidence was also stronger-than-expected at 95.8 (vs 94.5 cons, 94.2 prior).
- Meanwhile, Spanish flash July inflation was a tenth above consensus at 2.7% Y/Y (vs 2.6% cons, 2.3% prior).
