A Little Firmer & Flatter Early On

Gilts initially rally as they adjust to Monday’s late move higher in U.S. Tsys, but the uptick is contained and fades a little. That leaves futures +15 at 98.64, within Monday’s range.

• The bullish technical picture for the contract remains intact. Initial resistance seen at 99.25, while initial support comes in at 98.21.
• Cash gilt yields are 1-2bp lower, light flattening seen.
• Both 2s10s and 5s30s have moved away from recent highs early this week.
• GBP STIRs still little changed. ~47bp of ’24 cuts are priced.
• The latest Sunak-Starmer debate took place last night but won’t be a market mover, given the lack of fresh information & Labour’s wide lead opinion poll lead.
• The UK data calendar is empty today.
• The DMO will sell GBP1.5bn of the 0.75% Nov-33 I/L gilt this morning.