BOE: VIEW CHANGE: Santander look for quarterly cuts to 3.50%

SX7E (19th Dec) 195/220cs, bought for 4.8 in 6k vs 1.26k at 174.90.

2.50% Oct-29 RAGB (ISIN: AT0000A3EPP2)

• Spread set at MS + 19bp (guidance was MS+20 Area)
• Size: Benchmark
• Books in excess of E12bln (inc E1.15bln JLM interest)

3.20% Jul-39 RAGB (ISIN: AT0000A3D3Q8)

• Spread set at MS + 66bp (guidance was MS+67 Area)
• Size: Benchmark
• Books in excess of E16bln (inc E850mln JLM interest)

3.15% Oct-53 RAGB (ISIN: AT0000A33SK7)

• Spread set at MS + 97bp (guidance was MS+98 Area)
• Size: Benchmark
• Books in excess of E18bln (inc E1.7bln JLM interest)

For all:

• Settlement: April 30, 2025 (T+5)
• Bookrunners: Barclays (B&D), Citi, DB, GS, JPM, Raiffeisen Bank
• Timing: Books to close at 10:15BST / 11:15CET

From market source

Initial market reaction to the softer-than-expected flash PMIs sees gilt futures hit fresh session highs at 92.95, adding a little over 20 ticks vs. pre-data levels, before fading back to 92.80.

• Next resistance in the contract located at 93.00, followed by a Fibonacci retracement (93.44).
• Yields 3.5bp higher to 9bp lower, twist flattening bias intact. Long end yields fail to retest early session lows.
• BoE-dated OIS covering ’25 meetings little changed to 1.5bp more dovish vs. pre-PMI levels, with ~92bp of cuts showing through year-end. Recent range extremes of ~97bp of cuts over that horizon remains untested/intact.
• SONIA futures also rally before fading a little, last -3.0 to +1.0, strip twist flattens.
• Cycle highs set earlier in April/yesterday (dependent on contract) are untested.
• Alongside the new daily highs in Gilts, EUR/GBP rallies to touch 0.8578 before fading somewhat - the 15-minute candle chart isolates 0.8587 as resistance, the downtrendline drawn off the Monday AM high.