Friday, 23 April, 2021
ahead of the GILT remit @ 7:30 london
For the £/Gilt jockeys:
Prior to this morning’s gilt open we get the revised Remit this morning at 7.30am London
– RBC forecasts a £26bn reduction in gilt sales for the current fiscal year.
– BoAML: , the risk of FY 2021-22 Gilt issuance reduction is considerable, perhaps somewhat underappreciated by the market and likely supportive of Gilts on asset swap (ASW). Conversely, BoA are not so worried about the Asset Purchase Facility (APF) pace reduction as soon as May, despite some market participant concerns of a taper tantrum if the BoE does indeed pull the trigger.
– Citi: Citi expect a revised gilt remit will follow tomorrow’s public finances data. They expect a revision of -£25bn, meaning QE is likely to absorb 76% of issuance in Q2/Q3, supporting their tactical long in 10yr gilts vs Bunds (112bp, close 21Apr21).
– Barclays: Headline gilt issuance for FY21/22 is £295.9bn. A reduction in this
number to closer to £250bn would be hugely symbolic for HM Treasury. After the mammoth increase in gilt issuance seen over FY2020-21, it would represent a break with the COVID-19- driven increase in borrowing and a return to a more ‘normal’ period
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