Swaps - GBP
MPC hawk Saunders is having second thoughts (something to do with a global pandemic). Ignoring Covid restrictions, Dec21 is partying like it's 1999.
Headline trading made for an unnerving day as swappers waited with baited breath to discover the true nature of their new master Omicron.
The UK may be an emerging market according to some dealers but at least there was plenty to keep them busy.
Post-Powell curve flattening saw SONIA 2s/10s invert despite dovish BOE comments. At the long end the rally pulled 10s/30s and 30s/50s more negative.
A brief plunge in the gilt enlivened nominals as global bonds retraced from Omicron highs today. RPI remained strangely calm throughout the turmoil.
Corona, ex-divs and supply/demand dynamics combined to ensure gilt outperformance today.
Gilts outperformed on a thin but significant Thanksgiving that traders say will see some market participants offer no thanks whatsoever.
Sterling swaps bear-steepened today and asset swaps richened. In inflation, the wings of the curve rose led by another surge at the front end.
The syndicated sale of £1.1bn of the new 2073 went well in terms of demand and post-sale price action. But liquidity problems seemed to peak today.
Gilt yields closed higher as a global selloff picked up pace in the afternoon. Dealers are positioning for the upcoming linker syndication.