GILTS: Uptick In Oil Weighs
Mar-07 10:16
Gilt futures away from session highs, coming under pressure as European equities tick off lows and oil rallies.
- Futures as low as 91.67.
- The technical downtrend in the contract remains intact, although it is in oversold territory.
- Initial support at 90.71, with resistance at 92.08.
- Yields 3-4bp higher across the curve.
- 10-Year UK/German spread +2.5bp at 185.5bp, after registering the tightest close since September yesterday.
- GBP STIRs unwind some of yesterday’s late dovish move.
- BoE-dated OIS flat to ~3bp hawkish vs. late Thursday levels, 17.5bpof cuts priced through May, 22bp through June, 35bp through August and 48bp through year-end.
- We still look for the next cut to come in May.
- SONIA futures -1.0 to +3.0.
- UK headline flow remains muted.
- Little of note on the UK calendar ahead of the weekend, which will leave focus on macro and cross-market cues. The U.S. NFP release headlines the global calendar.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.461 | +0.6 |
May-25 | 4.280 | -17.5 |
Jun-25 | 4.233 | -22.2 |
Aug-25 | 4.104 | -35.1 |
Sep-25 | 4.071 | -38.4 |
Nov-25 | 3.990 | -46.5 |
Dec-25 | 3.973 | -48.2 |
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GILT AUCTION RESULTS: 1.50% Jul-53 Green Gilt
Feb-05 10:03
| 1.50% Jul-53 Green Gilt | Previous | |
| Amount | GBP2.00bln | GBP2.25bln |
| Avg yield | 4.976% | 4.831% |
| Bid-to-cover | 3.20x | 3.15x |
| Tail | 0.3bp | 0.5bp |
| Avg price | 47.369 | 48.532 |
| Low price | 47.342 | 48.483 |
| Pre-auction mid | 47.332 | 48.450 |
| Previous date | 31-Oct-24 |
MNI: EUROZONE DEC PPI +0.4% M/M, +0% Y/Y
Feb-05 10:00
- MNI: EUROZONE DEC PPI +0.4% M/M, +0% Y/Y
EUROZONE DATA: PPI Y/Y Slightly Higher Than Expected As Energy Base Effects Fade
Feb-05 10:00
Eurozone PPI in December was stable at 0.0% Y/Y, making it marginally above expectations (-0.1% consensus, -1.2% prior). This is the first non-deflationary print since April 2023 driven by energy base effects working their way out of the Y/Y figure. Note that excluding energy the PPI index has remained unchanged since September 2024, whereas including energy it has been increasing.
- Three of the five sub-components saw Y/Y pickups, and the remaining two remained stable.
- Energy producer prices fell at a softer pace of 1.7% Y/Y (vs -5.1% in Nov and -11.2% in Oct).
- Intermediate goods rose a marginal 0.1% Y/Y (vs a decline of 0.3% in Nov).
- Capital goods and non-durable consumer goods sustained their November pace of increase of 1.4% Y/Y and 2.0% Y/Y.
- On a sequential basis, PPI was touch softer than expected at 0.4% M/M (vs 0.5% consensus, 1.7% revised prior from 1.6%).
