Need To Know News

December bund futures trimmed gains after the Bank of England (BOE) cut rates by 100 basis points to 2%, a 69-year low.

The move was well-anticipated, with some actually expecting a repeat of the 150-bps cut in early November. December bunds rallied to a fresh contract high of 124.91 early in the session. About 15 minutes after the BOE announcement, the contract was trading around 124.10.

The European Central Bank (ECB) will announce its rates decision at 1245 GMT. Traders are expecting at least a 50-basis-point cut.

European debt futures opened higher ahead of the BOE and ECB announcements and extended early gains after the Swedish Riksbank slashed its repo rate by 175 bp to 2.00%, against a market median estimate for a 100 bp cut, raising the stakes for the BOE and the ECB.

There is also a chance the SNB will join other central banks and bring forward its rate decision from December 11.

The December 10-year Bund future is up 80 ticks on the day at 124.73, while the 10-year March Gilt future is up 67 ticks at 120.37. In the cash market the 10-year Bund yield is down 9 bp at 2.93% and the 10-year Gilt yield is down 8 bp at 3.35%.

Gilt futures have rallied in early morning trade, ahead of today’s BOE and ECB announcements but also underpinned by stronger Treasuries overnight.

The BOE is now widely expected to cut Bank rate by 100 bp and the ECB is seen to cut the refi rate by at least 50 bp. The March 10-year Gilt future is up 33 ticks at 120.03. The 2-year cash yield is down 4 bp at 1.63% and the 10-year yield is down 3 bp at 3.40%. FTSE 100 opened down 0.4%.