Fixed Income Blog: GBP Rates: Receive GBP vs USD 10Y

研报英文原文证据摘录

Fixed Income Blog: GBP Rates: Receive GBP vs USD 10Y

23 June 2026

Fixed Income Blog

The immediate fiscal trajectory should matter most for markets, rather than fiscal

headroom or other theoretical/forward looking metrics. Deficit expectations have

already been worsening. Policy coherence and a focus on growth should also

reduce the premium observed.

Given the risk premium remains elevated, much of the repricing in Gilts has been

a function of the front end which in turn has reflected the ceasefire and oil price

developments. Front end pricing has corrected substantially and still prices 38bp

of hikes. Assuming the ceasefire holds and given BoE rhetoric at the recent

meeting, more than two hikes fully priced seems unlikely at this stage, and market

pricing arguably also reflects the risk of looser fiscal policy. If anything, signs of

leverage in the equity market raises risk of a correction, which would result in

hikes priced out at very least. While USD 2s5s inverted post FOMC, in comparison

the GBP curve does not reflect the potential downside risks.

Swap spreads look increasingly divorced from fiscal risk, having performed

strongly in the face of political uncertainty. We view this as reflecting the impact

of expected banking sector deregulation. We had been constructive on spreads

earlier in the year for precisely this reason but abandoned the trade when political

concerns returned, which proved to be a mistake. The upcoming stability report

on July 7th will be the focal point for potential next steps. Given the nature of the

exercise, expectations of a recalibration are difficult to pinpoint, as such we would

look to bank equity performance as a guide (sector underperformance may also

result in spread underperformance).