Morning PWLB Predictions

Headline

Gilt Yields Dip as 1Y Sees Notable Drop of 4bps; PWLB Predictions Reflect Volatility

Gilt Market Analysis

The gilt market is experiencing a downward trend in yields across various tenors. The 1Y yield has decreased by 4bps to 3.570%, reflecting a risk-off sentiment as investors seek safety amid geopolitical tensions. The 10Y yield has also seen a decline of 3bps, now at 4.516%, while the 30Y yield is down by 3bps to 5.249%. This movement is largely influenced by today’s economic releases, particularly the stronger-than-expected consumer credit figures, which may impact future borrowing costs.

PWLB Reset Predictions

• 1y: predicted 4.56% [-2bp from current]
• 5y: predicted 4.98% [-1bp from current]
• 10y: predicted 5.57% [-1bp from current]
• 20y: predicted 6.10% [-2bp from current]
• 30y: predicted 6.19% [-2bp from current]
• 50y: predicted 5.94% [-2bp from current]

Context

The predictions reflect the recent movements in gilt yields, driven by economic data releases that have shown stronger consumer credit growth, which can influence borrowing costs for local authorities.

Calendar Events

Releases So Far Today

• GBP BoE Consumer Credit: Actual: 2.08B (Forecast: 1.20B, Previous: 1.71B) - MED impact - Stronger credit growth may indicate increased borrowing capacity.
• GBP Mortgage Approvals: Actual: 64.53k (Forecast: 64.80k, Previous: 65.01k) - MED impact - A slight miss could suggest cooling demand in the housing market.
• GBP Mortgage Lending: Actual: 4.49B (Forecast: 4.70B, Previous: 4.16B) - MED impact - Higher lending indicates potential for increased economic activity.
• GBP Net Lending to Individuals MoM: Actual: 6.60B (Forecast: 5.60B, Previous: 5.90B) - LOW impact - Positive growth in lending supports consumer spending.
• GBP M4 Money Supply MoM: Actual: 0.01 (Forecast: 0, Previous: -0.00) - LOW impact - Indicates stability in the money supply.

Remaining Today

• No further releases scheduled for today.

This Week Ahead

• Tomorrow 00:01: GBP BRC Shop Price Inflation (Forecast: 1.0%)
• Tomorrow 09:00: GBP New Car Sales YoY (Forecast: -1.0%)
• Tomorrow 09:30: GBP S&P Global Composite PMI Final (Forecast: 52.1)
• Tomorrow 09:30: GBP S&P Global Services PMI Final (Forecast: 52.1)
• Wednesday 09:30: GBP S&P Global Construction PMI (Forecast: 40.1)
• Wednesday: GBP Treasury Gilt 2031 Auction (Previous: 3.8%)
• Thursday 07:00: GBP Halifax House Price Index MoM (Forecast: 0.1%)
• Thursday 07:00: GBP Halifax House Price Index (Forecast: 1.0%)
• Thursday 10:00: GBP BBA Mortgage Rate (Forecast: 6.6%)

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.

Wishing you a productive day ahead in treasury management!