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FTSE Gains, Softer Stance in BOE Rate-Setters Speeches Could Steepen Gilt Curve

10/14/2021 | 04:15am EST

Softer Stance in BOE Rate-Setters Speeches Could Steepen Gilt Curve

A softer stance about the path of interest rate rises in the U.K. from Bank of England rate-setters speaking on Thursday could prompt the gilt yield curve to steepen, says Mizuho. "There's a strong chance that today's speakers could provide more clarity on where the consensus of the Monetary Policy Committee really is, and we'd expect this consensus to favour a more gradual path than is currently priced," analysts at the bank say. This could be a catalyst to steepen gilt forwards of intermediate maturities, which beyond 2 years are now extremely flat, they says, noting that the segments between 2-year 1-year forwards and four-year 1-year forwards are now inverted.

 
Companies News: 

UK Antitrust Watchdog Is Investigating Dye & Durham's Acquisition of TM Group (UK)

The Competition and Markets Authority said Thursday that it is investigating whether Canadian cloud-based software provider Dye & Durham Ltd.'s acquisition of TM Group (UK) Ltd. may lead to a substantial lessening of competition within any U.K. markets.

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National Express Revenue Continued to Improve in 3Q -- Update

National Express Group PLC said Thursday that revenue has continued to improve in the third quarter of the year, and it backed its full-year underlying pretax profit expectations.

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Rubix Group Holdings to List on London's Main Market

Rubix Group Holdings Ltd. said Thursday that it plans to list on London's main stock market and expects to raise proceeds of around 850 million euros ($985.6 million) via a placing of new ordinary shares.

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Castelnau Exceeds Target Issue in London Float

Castelnau Group Ltd. said Thursday that it has raised gross proceeds of 53.1 million pounds ($72.5 million) in its float on the London Stock Exchange, with its market capitalization exceeding its target issue size.

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Radiator Company Stelrad Confirms Intention to Float in London

Stelrad Group PLC, a manufacturer and distributor of steel panel radiators, on Thursday confirmed its intention to float on the London Stock Exchange.

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Purplebricks CFO to Step Down at End of October, Steve Long Named Successor

Purplebricks Group PLC said Thursday that Chief Financial Officer Andy Botha will step down from the role and board at the end of October and that it has named Steve Long as his successor.

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Capital & Regional to Restructure Mall Facility; Launches GBP30 Mln Fundraise

Capital & Regional PLC said Thursday that it has reached an agreement with lenders to restructure and reduce debt secured over its four mall assets, including launching a 30 million-pound ($41 million) open offer.

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Firering Strategic Minerals Expects to Float in London Next Month

Firering Strategic Minerals PLC said Thursday that it expects to float on the London Stock Exchange in early November and use the money to acquire pilot production plants and fund exploration.

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Quilter Chairman Glyn Jones to Retire Next Year

Quilter PLC said on Thursday that Glyn Jones will retire from his role as chairman and director in 2022 once a successor is in place.

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Marshall Motor Buys Car Dealer Motorline for GBP64.5 Mln -- Deal Digest

ACQUIRER: Marshall Motor Holdings PLC

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Kistos Appoints Peter Mann as CEO, Richard Slape as CFO

Kistos PLC said Thursday that it has appointed Peter Mann as chief executive officer and Richard Slape as chief financial officer.

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XPS Pensions Says FY 2022 Performance Remains in Line With Expectations

XPS Pensions Group PLC said Thursday that its performance for the year ending in March 2022 remains in line with expectations, and it guided for higher single-digit revenue growth in the period.

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Sabre Insurance Expects 2021 Pretax Profit to Miss Market Views

Sabre Insurance Group PLC said Thursday that it expects pretax profit for 2021 to miss market expectations, but that it is confident in its outlook.

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Norcros 1H Revenue Rose; Raises Full-year Profit Views

Norcros PLC said Thursday that it delivered a high level of profitability in the first half of fiscal 2022, and raised its full-year operating profit expectations.

 
Market Talk: 

Gilt Traders to Focus on BOE Officials' Speeches

0906 GMT - Gilt traders will pay special attention to speeches by Bank of England rate-setters Silvana Tenreyro and Catherine Mann scheduled later on Thursday. "Today's speeches from BoE's Tenreyro and Mann will be key for the development of the sterling front-end [of the yield curve] and in turn for longer maturities," Mizuho analysts say. They expect both Monetary Policy Committee members to oppose "what's been priced in lately, and show an aversion to voting for hikes in 2021," which would signal the MPC consensus favors a more gradual path of interest rate rises than what it is currently priced.

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Hays 1H Fee Growth Was Better Than Expected

0842 GMT - U.K. staffing company Hays's like-for-like fee growth of 41% for the first quarter of the fiscal year was ahead of consensus expectations of 36%, RBC Capital Markets says. There was better-than-feared growth in Australia and New Zealand at 34%, with no material negative impacts from current lockdowns which is key given the excessively strong correlation between Hays's share price and that of the wider Australian index, RBC says. "We believe that the available survey data and anecdotal evidence from the specialist staffers themselves pertaining to both employer and candidate confidence point to a solid base from which fees and, moreover, profitability can grow," the bank says.

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Demand from Pension Funds, Life Insurers Boosts Longer-Dated Gilts

0836 GMT - Steep demand for longer-dated U.K. sovereign bonds from pension funds and life insurance companies boosted the price of those bonds, driving yields lower. The yield on the 30-year gilt closed Thursday at a two-week low of 1.327%, according to Tradeweb. Mizuho analysts say that markets saw a significant amount of demand for longer-dated debt from life insurance companies and pension funds, particularly in the gilt market. "30Y gilt yields traded around 10.5bp lower on the day, driving a very sharp curve flattening, they say. Pension funds and insurance companies usually invest in long-dated assets to match their long-term obligations.

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Pound's Gains Seen Held Back by UK Supply Chain Issues, Inflation Fears

0745 GMT - Sterling's gains on speculation about an imminent U.K. interest-rate rise are expected to be limited, reflecting concerns about the nation's particularly severe supply chain issues, labor shortages and high inflation, Commerzbank says. Many of the supply shortages that the world is experiencing reflect pent-up demand in the wake of coronavirus so are expected to be temporary but this view doesn't apply to the U.K. due to Brexit, Commerzbank's Ulrich Leuchtmann says. The U.K. also faces further political and economic risks from its stubborn position in post-Brexit negotiations, he says. "Those make a stronger sterling impossible, despite rapid Bank of England rate hikes." GBP/USD rises 0.3% to a two-week high of 1.3700, according to FactSet. EUR/GBP falls 0.2% to 0.8473.

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Johnson Matthey Stock Is Seen Underperforming Due to Weak Automotive-Catalyst Business

0614 GMT - Shares in Johnson Matthey will continue to underperform as its automotive-catalyst business remains weak, with earnings growth from battery cathode materials and hydrogen failing to compensate, Jefferies says. Shortages have pushed back the automotive-catalyst unit's recovery, likely to 2022-2023, giving the FTSE 100-listed chemical and sustainable technologies company one to two years of earnings momentum in an internal combustion engine business which accounts for around 60% of sales, Jefferies says. "Our concern surrounds a weaker overall recovery and loss of another year of earnings [and cash flow] generation from a business in ultimate decline," the bank says. Jefferies cuts its rating on the stock to underperform from buy, and lowers the target price to 2,300 pence from 4,200 pence.

Contact: London NewsPlus, Dow Jones Newswires; Write to Sarka Halas at sarka.halas@wsj.com

(END) Dow Jones Newswires

10-14-21 0615ET

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