A Little Firmer On The Day, 20s Well Received

The latest round of 20-Year gilt supply extended the run of solid primary demand for that tenor (see previous bullets for deeper details).

• That provided some fresh demand for gilts on the whole, albeit with the space operating within contained ranges.
• Cash yields are 2-3bp lower on the day.
• Futures register fresh session highs post-auction, although the contact deals in a narrow 30-tick range, last +23 at 97.81.
• Key support (97.23) was not threatened during yesterday’s weakness, leaving the bullish technical backdrop intact. Meaningful resistance doesn’t come in until the May 16 high (98.76).
• SONIA futures are -0.5 to +2.5.
• BoE-dated OIS is inline with early Tuesday levels, 12bp of cuts are priced through June, with ~53bp of easing showing through year end.
• Lower tier UK CBI trends data is due a little later on but won’t be a market mover.
• We are also due to hear from BoE Governor Bailey (18:00 London), as he gives a lecture at the LSE entitled “The importance of central bank reserves”.
• This may not give us too much guidance on monetary policy, but we will be watching closely for any potential discussion of the future path of QT (click for our UK Deep Dive on that matter).