EUROPEAN FIXED INCOME UPDATE: UK debt still sharply underperforming

Analysis details (10:57)

Gilts remain by far the poor relation and for multiple reasons as the clock ticks down to Chancellor Kwarteng’s medium term fiscal plan that looks crucial in terms of allaying concerns about the nation’s public finances. In the interim, another ratings agency has placed the country on downgrade watch, while a letter from the BoE to the Treasury does not bode well at all for the next official FPC statement due on October 12 and the latest DMP findings merely highlight the MPC’s tough battle against inflation. Add to all that, the second no offers accepted buy-back op on Wednesday and one gets the rationale for renewed selling in UK bonds and 3 month futures for that matter, as the 10 year benchmark hovers below 97.00 within a 97.80-96.37 range compared to Bunds and the T-note holding close to parity between 140.13-139.24 and 112-22+/112-09 respective parameters. Ahead, busy pm agenda including US Challenger Layoffs, jobless claims and another throng of Fed speakers either side of BoC Governor Macklem. 

06 Oct 2022 - 10:57- Research Sheet- Source: Newsquawk