European Rates and Economics Daily

RBC previews the £4.0bn UK 7-year gilt auction and notes that gilts are currently tracking oil prices closely. Geopolitical developments in the Middle East and hawkish shifts from the RBA and RBNZ are the primary macro drivers.

Key Takeaways

• 1.The UK Debt Management Office (DMO) is re-opening the 7-year gilt (UKT 4.125% Mar-33) with a £4.0bn auction, supported by index extension flows and coupon reinvestment.
• 2.Oil prices (Brent crude) remain a primary driver for gilt performance, with a recent fall below $100 aiding the move to lower yields.
• 3.RBC has revised its terminal rate calls for the RBA (shift to August hike) and RBNZ (hike now expected in July) following higher-than-expected inflation and split votes.

Table of Contents

• Overnight news
• Data and events
• Gilt market outlook - UKT 4e33 (7y gilt) auction preview
• RBC growth and inflation forecasts
• RBC yield forecasts
• RBC RV Quadrant

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