RENEWABLES: UK Morning Wind Forecast

Gilts firm alongside core global FI peers, with German data and some optimism around the French political situation providing wider support.

• As we noted earlier, errors in the ONS PSNB data mean that the UK’s fiscal situation is slightly more favourable than was previously envisaged, which has probably driven some gilt curve flattening.
• 10-Year gilts underperform vs. Bunds, with the spread 1bp wider on the day.
• Futures +26 at 90.80.
• Bears remain in technical control, initial support and resistance is located at 90.26 & 91.08, respectively.
• Yields flat to 1.5bp lower, 2s10s ~5bp off September closing lows, while 5s30s is ~2bp off its September closing low.
• Comments from BoE chief economist Pill are due this afternoon.
• Elsewhere, the DMO will come to market with a GBP5bln sale of the new 4.00% May-29 gilt.

DUX5 107.10/107.00/106.90/106.70 broken p condor, sold at 5 in 5k.

OAT/Bunds tightens by a further 1bp as outgoing PM Lecornu points to a “shared will to have a budget by the end of the year”.

• This builds on the previously outlined optimism re: increased potential for a deal between Lecornu and the political left, which we detailed in a recent bullet.