Halister News

(Bloomberg) -- Gilt July 2026 has cheapened on the domestic curve and underperformed cross-market and vs swaps, writes Citigroup strategist Puja Sawant, in a client note.

• NOTE: DMO will re-open GBP2.5b of gilt 1.5% July 2026 at 11:30am CET for the first time since it was sold on Feb. 17
• July 2026s has cheapened vs Sept. 2025s over the past month and offers a pickup of ~13bps
• It has also cheapened on the gilt Sep22-Jul26-Dec30 yield fly post announcement
• 10y gilts have underperformed vs bunds over the past 2-mos.
• Bund scarcity could drive it wider still but gilts have started to richen in the last two days, perhaps reflecting Brexit risk and related 2Q growth concerns
• 10y gilts have cheapened vs swaps but wouldn’t fade ahead of the EU referendum, especially with heavy gilt supply in April-May