The Debt Management Office has scheduled a 225 million pound tap of the 0.375 percent index linked Treasury stock 2040 for November 10, settling November 11. The size is small by the standards of the UK’s programme, which continues to run heavy conventional supply, including the 4.25 percent 2036 gilt line of 4.75 billion pounds.
Index linked issuance is where the UK’s inflation credibility is priced most directly. The 2040 linker pays a real coupon of 0.375 percent plus RPI accrual, so its clearing level on November 10 will show what investors charge for two decades of British inflation risk after a year in which energy prices, not domestic demand, have done the damage.
The Chancellor used this week’s IMF meetings to argue that the forthcoming budget will protect the resilience of the UK economy, a message aimed squarely at the gilt market. The DMO’s calendar, steady, small linker taps inside a large conventional programme, is the operational version of the same pitch.