Swaps - GBP
GEMMs said that the IL41 went well (for the Street) today, selling at a six-month high in real yields and rallying afterwards.
A sharp, ISDA-driven flattening of the SONIA-BOR curve was the big event in a market thirsting for liquidity ahead of the IL41 syndication.
One trader described November as ‘August in winter’, as the market continued to tick over in low volumes. The 2049 gilt tap came with a wobble.
Breakevens and RPI swaps were both marked down in afternoon trading following lower-than-expected UK inflation data.
Mixed UK employment data for October this morning rallied gilts in the morning, before they fell in the afternoon.
The latest Brexit-election news sent short sterling gapping lower and provided much-needed interest in a holiday-hit session.
A week that saw dovish words from the MPC and bearish price action in the gilt market was ending with something of a short-covering burst.
The BOE unexpectedly shuffled in a dovish direction, but even a muted response for electoral reasons couldn't stop a big 2s/10s move steeper.
Gilts shake off sell-off, keep eyes on the MPC.
US equities, and then later, US data drove a session that saw gilt yields rise and breakevens flatten.