US TSY FUTURES: UXY Blocked

ERM5 97.625/97.75/97.875c fly vs 97.4375/97.3125ps, bought the fly for 0.25 and half in 9k.

• Guidance: MS+107bps area
• Size: Benchmark (MNI expects E3-4bln)
• Maturity: 15 June 2035
• Settlement: 21 January, 2025 (T+5)
• ISIN: GR0124041758

Via Bloomberg / market source

Gilts track global peers higher, with media reports pointing to the potential for a more gradualist tariff approach from President-elect Trump and Franch political headlines providing support.

• Futures as high as 89.72 before fading back to 89.55.
• Bearish technicals intact, initial support & resistance located at 88.96/90.31.
• Yields 1-3bp lower, curve bull steepens.
• 10s spread to Bunds 2bp tighter, oscillating around 225bp.
• BoE-dated OIS still pricing 44bp of cuts through year-end, SONIA futures flat to +3.0.
• Today’s GBP1.0bln 30-year 1.25% Nov-54 I/L gilt auction will probably get more attention than usual, with the potential for it to be viewed as a litmus test for demand by wider markets given the recent weakness in UK assets.
• Chancellor Reeves’ will appear in the Commons later today, with MPs set to question the UK’s fiscal outlook after the recent increase in market-based fiscal risk premia.
• Don’t expect much of a change in tone, with her focus set to remain on the upholding of fiscal rules and a desire to generate economic growth.