Swaps - GBP
A big risk-off move greeted the developments in what is already the second global scare of the 2020s.
Today’s much-hyped Jan PMI data came, and then went, leaving the sterling market profoundly uninterested. Instead, 50y flow caught the eye.
ISDA has released letters from the UK FCA and IBA addressing some of the pre-cessation issues around LIBOR.
Bunds led a late surge in gilts this afternoon after the ECB, while the IL48 tender went pretty swimmingly.
The gilt rallied back from the lows tested following an unexpected surge in business sentiment but the curve remained flatter at the close.
GBP traders were happy with the good people of the DMO today after the auction of new 2041. Elsewhere SONIA-BOR is recovering and UK munis are born.
A low energy start to the week saw gilts underperform slightly after house price data added to a slight sense of cold feet ahead of the MPC.
Traders said that sterling market activity today, and for previous sessions, has been very much a tale of two wings.
SONIA-mania, rate-cut fever and the impact of the delay in the RPI consultation timetable combined to produce a lively day for GBP fixed income.
The BOE and the FCA have launched an initiative to hasten the switch from LIBOR to SONIA across sterling cash and derivative markets.