GILTS: Weaker To Start, Tariff Readthrough Eyed
May-29 07:29
Gilts follow peers lower on the back of the Court of International Trade’s judgement blocking a significant portion of the U.S. tariffs (detailed in earlier bullets).
- The move is slightly less pronounced than what is seen in Bunds, presumably as the UK has already struck a trade deal with the U.S. and was seen to be subjected to slightly less trade uncertainty when compared to the EU. Note the UK will still benefit from the rollback of any non-sectoral tariffs (all else equal).
- The Trump administration has already appealed the judgement and there are several channels that Trump could use to levy further tariffs in the interim.
- Gilt futures through yesterday’s base, trading as low as 90.69, before a recovery to ~90.85.
- Initial support lies at the May 23 low (90.46). Bears remain in technical control.
- Bulls need to retake the May 20 high (91.87) to start turning the tide more in their favour.
- Yields back near flat across the curve after opening ~2bp higher.
- 10s ~1bp tighter vs. Bunds at ~216bp. The cluster of April closing highs (218.3 & 218.8bp) remain intact.
- BoE Governor Bailey will speak after the close (20:00 London).
- On the supply front, the DMO will come to market with GBP1.25bln of 0.125% Aug-31 I/L paper this morning.
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Historical bullets
GILTS: Firmer, Recent Ranges Intact
Apr-29 07:25
Gilts initially firm given the continued move lower in crude oil futures, although moves away from session highs in core global FI peers limit the rally.
- Futures stick within yesterday’s range, trading as high as 93.25 before fading back to 93.10 last.
- Initial support and resistance located at 92.20/93.34, recent bullish technical theme remains intact.
- Yields ~1.5bp lower across the curve.
- 10s below 4.50%, with yield support located at 4.460% still untested.
- Spread to Bunds remain pinned around 200bp after the pullback from April highs (218.8bp), the April 8 closing level (197.4bp) remains intact.
- GBP STIRs still around levels flagged ahead of the gilt open, showing ~90bp of cuts through year end.
- On the supply front, the DMO will come to market with GBP900mln of the 1.25% Nov-54 I/L line this morning.
- The only previous auction of the line came in January, with a slightly larger auction size of GBP1.0bln. A decent bid-to-cover of 3.06x was seen at the prior auction. Demand will be watched closely at this auction as it is the first long-dated linker auction since the U.S. tariffs were implemented.
EQUITIES: The Banking sector leads in Europe
Apr-29 07:20
- The Banking sector (SX7E) leads in Europe, its best level since the 2nd April, and immediate resistance comes at 190.12, the April high.
- Estoxx futures (VGM5) is in turn underpinned, but trades in a small range and still short of the 5150.00 level, this was Yesterday's high, and best print since the 4th April.
EGB SYNDICATION: Finland New 10y Sep-35 RFGB: Guidance
Apr-29 07:19
- EUR Benchmark Long 10Y Fixed (Sept. 15, 2035) MS+54 Area
- Coupon: Annual, act/act ICMA, short first
- Issuer: Finland Government Bond (RFGB)
- Ratings: Aa1/AA+ (Moody's/Fitch)
- Format: Reg S CAT1, registered, senior unsecured, 144a eligible, CAC, 0% rw
- Settlement: May 7, 2025
- Timing: May price today
- ISIN: FI4000587415
- Bookrunners: BNPP (B&D), Citi, CA-CIB, GS, Nordea
Details as per Bloomberg
