A Little Firmer To Start

Gilt futures are +25 at 97.55, dealing in a narrow 99.38-63 range thus far.

• The bearish technical threat remains in the contract, initial parameters: support at the Feb 13 low/bear trigger (96.81) & resistance at the 50-day EMA (98.71)
• Cash gilt yields are 2.5-3.5bp lower, with 2s outperforming.
• Local headline flow has been light.
• The lower-than-expected fixing in China’s 5-Year LPR presents the most obvious headline catalyst for the move away from yesterday’s low in wider core global FI markets.
• SONIA futures are flat to +5.0 through the blues, leaning on the uptick in gilts for fresh support.
• BoE-dated OIS shows flat to 3.5bp lower through ’24 contracts, with ~70bp of cuts currently priced for ‘24.
• The presence of today’s GBP1.75bn 4.00% Oct-63 gilt supply is noted, and may be aiding the early, modest bull steepening on the curve.
• Meanwhile, Tuesday's local docket will be headline by a TSC appearance from BoE's Bailey, Broadbent, Dhingra & Greene.
• Most of that group’s monetary policy views are well-defined, while Deputy Governor Broadbent is unlikely to stray too far from the central BoE view.