BONDS: EGBs-GILTS CASH CLOSE: Gilts Underperform Bunds As BoE Vote Leans Hawkish

• RES 4: 1.2811 High Dec 6 
• RES 3: 1.2767 50.0% retracement of the Sep 26 ‘24 - Jan 13 bear leg 
• RES 2: 1.2667 High Dec 19
• RES 1: 1.2635 High Feb 17
• PRICE: 1.2615 @ 16:08 GMT Feb 18
• SUP 1: 1.2466 20-day EMA     
• SUP 2: 1.2333/2249 Low Feb 11 / 3 and a key short-term support
• SUP 3: 1.2161 Low Jan 17 / 20
• SUP 4: 1.2100 Low Jan 10 and the bear trigger   

A bull cycle in GBPUSD remains in play and the pair is holding on to its recent gains. A recent breach of resistance at 1.2550, the Feb 5 high, confirmed a resumption of the current uptrend. Furthermore, 1.2610, 38.2% of the Sep 26 ‘24 - Jan 13 bear leg, has been pierced. A continuation higher would strengthen current conditions and open 1.2767, the 50.0% retracement. Key short-term support is 1.2333, the Feb 11 low.               

• The timely Dallas Fed’s banking conditions survey, collected Feb 4-12, noted that “loan volume continued increasing at a rapid pace in February while loan demand accelerated further.”
• Whilst only a snapshot for one region, it's nevertheless of note with some disagreement on the FOMC as to the level of restrictiveness currently exerted by monetary policy.
• The current period loan demand balance of +30 is up from +11 in the late Dec survey for its highest since May 2022, whilst future loan demand only dipped 3pts to a still elevated +16.
• A net share continue to see tighter credit standards, but with a balance of -10.4 (after -12.5 in late Dec), it poked below the -10.5 in Oct for technically its least since Apr 2022.
• The press release notes that “Loan nonperformance rose across all loan types, while growth in general business activity slowed”. However, we note that the current period NPL ratio at +16 is within recent ranges, which included the Jan 2025 high of +25. What’s more, the balance expecting higher NPLs in the future at +14 was up from two particularly low reports at 4-5 but is stil far lower than the +50 balances seen in 2023. 

• US TSY 52W BILL AUCTION: HIGH 4.050%(ALLOT 6.53%)
• US TSY 52W BILL AUCTION: DEALERS TAKE 31.76% OF COMPETITIVES
• US TSY 52W BILL AUCTION: DIRECTS TAKE 1.68% OF COMPETITIVES
• US TSY 52W BILL AUCTION: INDIRECTS TAKE 66.56% OF COMPETITIVES
• US TSY 52W AUCTION: BID/CVR 3.03