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A Touch Firmer Ahead Of Busy UK Data Week

GILTS

Gilts have tracked global core FI to begin the week, with futures +12 at 97.62, having drifted away from today's best levels. As such, Gilts continue to trade within Friday's range and within well-defined technical parameters. The first support is 97.39 (Dec 11 low) while the 20-day EMA at 98.90 is the first resistance.

  • In addition to the Times article on MPC Deputy Governor Broadbent's replacement in June noted earlier, weekend headline-flow has been politically-centred, with Labour's decision to reduce the size of their green investment pledge still in focus.
  • The SONIA strip sits flat to +3.5 ticks through the blues, while BoE-dated SONIA OIS price 74bps of rate cuts through 2024. The first full cut is fully priced through the August meeting (30bps priced at typing).
  • The move in front-end rates allows the cash curve to lightly bull steepen, with yields flat to -1bp lower.
  • Today's light data docket precedes a busy week in UK markets, with labour/inflation data due Tuesday/Wednesday (our preview will be released later today), followed by GDP/retail sales data on Thursday/Friday.
  • We also hear from Governor Bailey at 1800GMT in a speech at Loughborough University, for which text will be released.

Meeting DateSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Mar-245.182-0.6
May-245.118-7.0
Jun-245.033-15.5
Aug-244.887-30.1
Sep-244.751-43.7
Nov-244.579-60.9
Dec-244.452-73.6
Feb-254.306-88.2
Source: MNI/Bloomberg
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