Gilts: unsettled by UK Government borrowing needs

A bit more downside for debt futures in wake of the latest public sector deficit figures, despite some smaller than expected shortfalls. An 80% of GDP ex-banks/BoE headline is eye-catching and of course the Government’s financing position is just as contingent on the Brexit outcome in the longer run as the economy overall. Gilts remain on the backfoot within a 124.75-50 range, but in truth more in line with the general tone following a downturn in US Treasuries after Thursday’s European close.

Indeed, Bunds are just a few ticks off a marginal new 161.54 Eurex session low, and 10 year US T-notes are just above their 124-29+ nadir at 125-00. To recap, the catalysts for softer bonds – Washington passing the 2018 budget resolution and Fed chair favourites said to be Powell and Taylor.

Spanish 10 year Bono yield back up around 1.65% ahead of the anticipated Article 155 activation against Catalonia over the weekend.

20 Oct 2017 - 10:01- - Source: RANsquawk

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