BOE: STR usage sees modest W/W increase; BOE repo usage at second highest ever

• ILTR usage has increased GBP1.201bln net, to put the total outstanding usage at GBP79.914bln.
• This puts ILTR usage at a new record high (surpassing last week's record high).

The 10-year Gilt/Bund spread has widened 3bps to 184bps this morning. Gilt yields are up 4.5bps to 5.03%, exhibiting a higher beta to today’s rise in Brent crude prices than Bunds. A simple model based on 1y1y rate differentials and Brent crude places 10-year Gilt/Bund FV at ~178bps at present.

• Brent crude is up 2% to $89.50/bbl today. Expectations surrounding the prospect of a deal to fully reopen the Strait of Hormuz have deteriorated since Monday amid stricter Iranian conditions and US President Donald Trump's as-yet-unspecified demand for compensation from Iran.
• 10-year Bund yields are currently at 3.20% (+1.5bps today). This level that has contained topside on several occasions since the Iran war started.
• Both the German and UK curves have seen fairly uniform shifts higher this morning, with near-term ECB and BOE rate hike expectations well embedded for now.
• Germany sold E6bln of the 2.90% Oct-31 Bobl this morning, with Finland selling up to a combined E1.5bln of the on-the-run 10-year 3.35% Sep-36 RFGB and the 0.50% Apr-43 RFGB at 1100BST.
• 10-year EGB spreads to Bunds are up to 1.5bps wider today. The BTP/Bund spread is up  ~3.5bps this week to 79.5bps.