CONSUMER STAPLES: Japan Tobacco: $-3part

• Reoffer: 97.142 to yield 2.0234% (real)
• Spread set earlier at 0.125% Aug-48 linker (GB00BZ13DV40) + 1.0bp (Guidance was +1.0/1.5bps)
• Size: GBP5.0bln (larger than the GBP4.0-4.5bln MNI expected) - MNI note: This is the largest ever gilt linker syndication
• Books in excess of GBP67.5bln (inc JLM interest of GBP4bln) - MNI note: That is the largest ever book for a gilt linker syndication
• HR : 90% vs 0.125% Aug-48 linker
• Maturity: 22 September 2049
• ISIN: GB00BT7J0134
• Coupon: 1.875%, long first
• Settlement: 12 March 2025 (T+1)
• JLMs: BofA Securities, J.P. Morgan, Lloyds Bank Corporate Markets (B&D/DM), and UBS Investment Bank

From market source / MNI colour

Tsys have faded further away from highs through the NY crossover, removing a cross-market layer of support for gilts.

• Gilt futures traded to fresh session lows as a result, before stabilising in recent trade, sticking to a contained 47-tick range.
• Initial support at Friday’s low is still ~40 ticks below prevailing levels.
• Yields little changed to 2.5bp higher, curve steeper. Both 2s10s and 5s30s are on track for fresh cycle eclosing highs.
• 10-Year gilt/Bund spread off lows but still ~3.5bp tighter on the day after gilt bulls failed to break 175bp.
• Still awaiting price of the new 1.875% Sep-49 I/L syndication, which generated a record I/L syndication size and orderbook.
• Outside of that, macro cues continue to dominate.

GBP/USD's latest press higher has spot through yesterday's highs and touching a new YTD best of 1.2952, extending the rally off the YTD lows to 7%. GBP's not leading strength across G10 here, again underscoring that it's the USD weakness that's driving price action (GBP/JPY, GBP/EUR still well below recent highs).

• The USD Index has broken to another pullback low today of 103.329 - this cements the erasure of the post-election gains - and exposes 102.521 in the process. JOLTS jobs data will be the next point of focus here, with markets looking to gauge higher quality insight into the jobs market after Friday's NFP.
• We note that options markets are isolating EUR, JPY, SEK and NOK as the most sensitive currencies to tomorrow's US CPI print - with overnight implied adding over 7 points in the lead-up to tomorrow's print. Given outsized spot gains for all four currencies against the USD, markets may be increasingly cognizant of reversal risks, particularly as EUR net positioning shifts much closer to neutral after maintaining a sizeable net short for ~three months.