Morning PWLB Predictions

Dear Local Authority Treasury Officers,

Market Overview

Headline

1Y Gilt Yield Drops 11bps: PWLB Predictions Reflect Volatility

Gilt Market Analysis

The gilt market has shown notable movements this morning, particularly in the short tenor. The 1Y gilt yield has decreased by 11bps to 3.788%, reflecting a risk-off sentiment as investors react to recent economic data. In the belly of the curve, the 10Y gilt yield remains unchanged at 4.537%, while the 20Y gilt yield has increased by 1bp to 5.173%. The market sentiment appears cautious, influenced by the latest GDP growth figures and current account data, which have come in better than expected, supporting the stability of gilt yields.

PWLB Reset Predictions

• 1y: predicted 4.64% [-1bp from current]
• 5y: predicted 5.01% [0bp from current]
• 10y: predicted 5.59% [+1bp from current]
• 20y: predicted 6.13% [0bp from current]
• 30y: predicted 6.22% [0bp from current]
• 50y: predicted 5.98% [0bp from current]

Context

The predictions reflect the recent movements in the gilt market, particularly the decline in the short end and slight increases in the longer tenors, driven by the better-than-expected economic data released today.

Calendar Events

Releases So Far Today

• GBP Current Account: Actual -12.10B, Forecast -18.80B, Previous -21.20B (MED impact) - Better than forecast, indicating stronger economic activity which may support gilt prices.
• GBP GDP Growth Rate YoY Final: Actual 1.3%, Forecast 1.3%, Previous 1.4% (LOW impact) - In line with expectations, providing a stable outlook for the economy.
• GBP GDP Growth Rate QoQ Final: Actual 0.1%, Forecast 0.1%, Previous 0.2% (LOW impact) - Confirmed growth but slower than previous quarter, which may affect market sentiment.
• GBP Business Investment QoQ Final: Actual 0.01, Forecast -0.00, Previous -1.7% (LOW impact) - Positive surprise, indicating potential recovery in business investment.
• GBP Business Investment YoY Final: Actual 0.03, Forecast 0.01, Previous 3.2% (LOW impact) - Suggests resilience in business investment despite previous declines.

Remaining Today

• No additional releases scheduled for the remainder of today.

This Week Ahead

• No additional releases scheduled in the next seven days.

This commentary is provided for informational purposes only and should not be construed as financial advice. Market conditions can change rapidly, and you should always verify current rates directly with the PWLB or through official channels before making borrowing decisions. Past performance is not indicative of future results.

Keep your treasury operations sharp and informed!