A Little Firmer To Start

The softer-than-expected services PMI data out of France allows the early uptick in core global FI markets to extend.

• Gilt futures are through yesterday’s highs but are nowhere near closing yesterday’s opening gap lower (97.98), last +17 at 97.16.
• Yesterday’s move lower cleared key support, with yesterday’s low (96.83) now presenting the initial bearish target. The 50-day EMA (97.71) provides initial resistance.
• Cash gilt yields are 1-2bp lower across the curve, with a light flattening bias.
• SONIA futures and BoE-dated OIS are roughly in line with pre-gilt open levels flagged earlier.
• Local headline flow continues to focus on yesterday’s CPI data and political developments, although the latter did not have any tangible impact on markets.
• Our policy team's latest piece noted that "the Bank of England’s June meeting is likely to go ahead as planned despite general elections called for July 4, with precedent showing that Monetary Policy Committee votes have been held in the midst of political campaigning."
• Flash PMI data headlines the UK calendar today, with a focus on the passthrough of input costs to output prices, given the BoE’s focus/optimism surrounding that matter.
• Elsewhere, BoE chief economist Pill will speak at a conference, although the topic of the panel will be “The promise of macro-pru”, which limits the scope for meaningful rhetoric on broader monetary policy matters.