GILTS: Away From Highs As Bunds Falter, Fiscal Questions Eyed

• EUR Benchmark (MNI expects a E8-10bln size) of the new May-56 OAT
• Revised guidance: May-55 OAT +5bps +/-1 WPIR (was + 7bps area)
• Books above €100bn (including €2.84bn JLM interests)
• Issuer: Republic of France
• Ratings: Aa3 (Moody’s Stable)/AA- (S&P Stable)/AA- (Fitch Negative)/AAh (DBRS Stable)
• Format: OAT (in dematerialised book entry form), RegS Cat 1, 144A eligible, CACs
• Maturity: 25 May 2056
• Settlement: 19 February 2025 (T+5)
• Coupon: Fixed, annual ACT/ACT, payable each 25 May. Full first coupon on 25 May 2025
• Bookrunners: BNPP (DM and B&D) / Citi / DB / JPM / SG
• Timing: Books open, today's business

GBP/USD's strong rally off yesterday's lows means the pair has now retraced over 50% of the post-BoE decision losses, putting the price within 100 pips of last week's highs.

• This signals that markets are taking Mann's views at face value this week - and that her vote for 50bps last week isn't the beginning of series of votes for aggressive easing given her preference for restrictive policy (we gauge bank rate as being ~100bps above her top estimate of neutral, therefore leaving little room for sizeable cuts).
• More broadly, the negative bias toward GBP/USD persists. Our CFTC positioning dashboard has GBP's 52w Z-score at -1.52, signalling positioning momentum is the second most-negative in G10 after NZD. This is reflected in the bias toward downside protection in GBP/USD this year: the shift lower for 3m risk reversals in January has largely stuck, mirrored in demand for OTM puts - we've tracked near $3bln cumulative notional traded across 1.22 puts in the past month, again cementing the market's concern over GBP downside risks.
• It's these factors that may provide asymmetric upside risks to GBP on strong data releases ahead - particularly data covering consumption, a driver of the weak demand that helped trigger Mann's vote for 50bps last week. Prelim Q4 GDP data crosses tomorrow morning.

SX7E (17th Apr) 170^, sold at 11.10 in 6k.