A Touch Richer & Steeper To Start

Gilt futures had a look towards yesterday’s base at the open, adjusting to the late Tuesday weakness in U.S. Tsys, before recovering to last +15 or so.

• Cash trade sees the major benchmarks running 1.0-2.5bp richer, steepening modestly after yesterday’s aggressive bear flattening.
• SONIA futures are mixed, while BoE-dated OIS comes in a touch, although still indicates a terminal rate of over ~5.80%.
• UK GDP and monthly economic production data was generally inline with exp., save soft construction readings.
• Late yesterday BoE chief economist Pill noted that “we are committed to doing everything we can to bring inflation back down to its 2% target because we recognise the huge effect it has on families and communities.”
• The most notable domestic news story probably comes via the Telegraph, with their sources reporting that “Downing Street has ordered banks to protect struggling homeowners from soaring mortgage costs.”
• Plenty of questions remain re: how the UK would navigate the market-implied BoE policy rate path, in addition to still elevated levels of inflation (in at least the immediate term), general expectations surrounding fixed rate mortgage roll offs and what is expected to be another costly winter on the energy price front.