UK: Focus on BoE’s APF operation and CPI numbers - SocGen

Kit Juckes, Research Analyst at Societe Generale, suggests that the UK sees CPI/RPI/PPI data this morning (for what it’s worth, we look for CPI at 0.6% y/y, core at 1.4%, RPI at 1.7%, core output PPI at 0.8%).

Key Quotes

“But the focus will be on the Bank of England’s APF operation, aiming to buy GBP 1.16bn of 15yr+ gilts, with results at 14:45 UK time. 20-year Gilt yields are almost 1% lower than they were on June 23 and a dozen basis points lower than they were a week ago, before the last bond-buying operation.

Sterling has matched that collapse in yields. I’m going to be bearish of Gilts long before I stop being bearish of sterling, but for today, with so much focus on the reverse auction, the fate of yields and currencies is even more intertwined than usual. A successful operation and a correction in gilts, is the about the only way to temporarily reverse the pound’s fall.”