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 |
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US: Senate 'Vote-A-Rama' On GOP's OBBB Expected To Start At 09:00 ET 14:00 BST
A ‘vote-a-rama’ on the GOP’s 'One Big Beautiful Bill' is expected to get underway in the Senate today at 09:00 ET 14:00 BST. In final passage, Senate Majority Leader John Thune (R-SD) can likely only drop one vote, as Senators Rand Paul (R-KY) and Thom Tillis (R-NC) have indicated they will vote 'no'. BILL TEXT
- The vote-a-rama, a Senate procedure wherein the governing party must overcome a raft of amendment proposals - primarily from the minority party - is likely to stretch into Tuesday.
- House Speaker Mike Johnson (R-LA) has teed up a hearing in the Rules Committee on Tuesday, eyeing a possible vote on Wednesday, July 4 – the self-imposed deadline for sending the package to President Trump’s desk.
- While the package is expected to clear the Senate, Johnson’s more challenging lift in the House was further complicated by a new CBO score estimating the package would add roughly USD$3.3T in budget deficits over a decade. That is USD$500B higher than the House package.
- The conservative House Freedom Caucus signalled disapproval on X: “The Senate version adds $1.3 trillion to the deficit. That’s 1,705% more [than the House version]... it is $651 billion over our agreed budget framework.”
- Data from Polymarket indicates a 70% implied probability the bill will pass by July 4, with bettors judging that pressure from Trump will be enough to overcome House opposition.
- For more analysis, see our upcoming US Daily Brief at 08:00 ET 13:00 BST.
Figure 1: “Reconciliation bill passed by...?”
Source: Polymarket
EUROPEAN INFLATION: German State-Level Details: Higher Energy, Lower Services
Looking a bit closer at this morning's German state level June inflation data, as expected, energy was the main upward driver vs last month, with the yearly rate ticking up to broadly -3.6% to -3.7% (-4.6% May). Services inflation meanwhile appears to have decelerated a bit in June, we track it at 3.3% Y/Y (3.4% May, both these estimates are only based on 50% basket weighting).
- Looking at the categories with heavy services weighting, we see recreation and culture at 1.0-1.1% Y/Y (1.1% May), education at 4.7% Y/Y (unch), but restaurants and hotels much softer than before at around 3.5% Y/Y (a much lower NRW print skewed the average here, vs 4.3% May).
- The mixed-weighting transport category has accelerated to around 1.5% Y/Y (0.6% May) - that appears reasonable looking at the energy acceleration amidst the Middle East conflict.
- Core goods inflation might have remained broadly stable in June - furnishings and household equipment appear to have accelerated to around 0.0% Y/Y (-0.3% May), while clothing and footwear was lower than before, at -0.3% Y/Y (0.5% May).
EQUITIES: Estoxx rolling Put
- SX5E (15th Aug vs 19th Sep) 5300p, bought the Sep for 34 in 2.5k.
Option Flows across multi assets, Bonds, Rates, Equity and FX have been very light so far Today.
