[MARKET ANALYSIS] Gilts outperform ahead of UK PM Burnham, USTs await data, Fed speak and geopolitical updates

A firmer start to the day, but the magnitudes vary significantly. USTs near-enough flat, awaiting an update on the geopolitical front; as it stands, Iran has suggested that a final response from the US could be presented to them by the US via Qatari mediators. Though, details on that remain light. Nonetheless, and despite relatively punchy (but familiar) Iranian rhetoric, energy has eased off highs across the morning. USTs flat in 104-08+ to 104-19 parameters. Aside from the above, the day features a handful of Fed speakers that may prove pertinent in addition to the latest JOLTS and confidence data stateside. Bunds firmer by around 20 ticks at the time of writing, a few ticks shy of Monday’s 119.71 peak thus far. Specifics for the space are a little light, no move to ECB speak or a handful of data points. Otherwise, focus remains on the energy complex, and particularly TTF which continues to ease but remains well above EUR 70/MWh. Gilts outperform, firmer by c. 50 ticks at best, but have eased modestly off the 84.44 peak across the morning. Outperformance comes ahead of the 14:00BST speech by UK PM Burnham at the Labour Party Conference. A speech that is expected to touch on a number of topics as part of his plan for the UK ahead. Particular focus will be on the triple lock, reports hint that he will open the door to an end to this in his speech, by signalling a review of it as part of the next Labour manifesto. Reporting that drives Gilts higher, as the fiscal cost of the commitment is already significant and is projected to increase markedly in the years ahead. However, it remains to be seen if there is the political/public appetite for this, and what measure(s) Burnham will have to provide to offset the hit to pensioners. For reference, projections for the lock suggest it will cost over GBP 15bln/yr in 2030.