TURKEY: Simsek Sees Single Digit Inflation in 2027

A quick note that the BoE will sell GBP750mln of gilts from its short maturity bucket within the APF (3- to 7-Year paper) this afternoon.

Gilts little changed, with the modest, early European bid in Bunds fading.

• Futures in a narrow 92.33-50 range.
• Initial support and resistance (92.12 & 92.79) untouched.
• Wednesday’s sell off in the contract negated the bullish technical outlook in play at the time, although futures have recovered in the time since.
• Yields 1.5-2.5bp lower, curve bull steepens, aided by BoE’s Taylor reaffirming his dovish stance late on Friday.
• 2s10s and 5s30s haven’t been able to retest cycle highs during the recent steepening.
• Fundamentals continue to point to further steepening of the border curve, although already crowded positioning and the potential for the BoE to adjust its QT scheme present risks to this view (our QT thoughts are here).
• Headlines are likely to dominate today, with little of note on the macro calendar and U.S. President Trump set to issue tariff letters (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 (see our early GBP STIR bullet for more on that).
• Monthly economic activity data (Friday) headlines this week’s local data calendar, while BoEspeak will come via Breeden on Thursday.

Fitch on Japan: "Fitch Ratings: Japan Debt Risks Contained in Near Term, But Significant in Long Term"

"Reflationary dynamics will support a continued decline in Japan’s government debt/GDP ratio in the next few years, Fitch Ratings says in a new report. This is despite long-term pressures on debt sustainability from higher interest payments, growing ageing-related costs, as well as increased spending on defence and childcare. Japan’s government debt ratio is already significantly below pandemic-era highs".

"We expect the debt trajectory to turn upward again by the end of the decade, and Japan will continue to have the highest ratio of debt/GDP among Fitch-rated sovereigns. Public finances are the key credit weakness reflected in its ‘A’/Stable rating, which we last affirmed in January 2025, noting the medium-term trajectory of government debt as a key sensitivity for any future rating action."

"Over the longer term, ageing-related costs will put persistent pressure on Japan’s fiscal deficit, mostly through higher healthcare costs. However, fiscal reforms could mitigate the impact".