A Touch Softer Alongside Peers, Global Matters Eyed

Gilts edge lower with core global peers also on the defensive.

• Upside risks surrounding this morning’s Eurozone HICP data are likely at play here.
• Futures are a little shy of yesterday’s late session high as a result, last +2 at 95.81.
• Bulls haven’t got anywhere near testing initial resistance at Wednesday’s high.
• Cash gilt yields are 0.5-1.5bp higher, with the recent curve steepening theme intact.
• SONIA futures and BoE-dated OIS is still little changed on the day.
• Discussions generally remain centred on political matters, with fiscal matters and speculation surrounding Labour's policy plans at the fore there.
• Elsewhere, lower tier UK data (Lloyds’ business barometer & Nationwide house prices) were firmer than expected.
• Yesterday’s record short-term BoE repo allotment represented an extension of the recent trend and is getting plenty of attention as economists and strategists look to map out any potential impact on QT.
• A reminder that BoE Governor Bailey has previously suggested that the take up at those operations is “encouraging.”
• The recent round of RONIA/SONIA spread widening has reversed, placating any worry surrounding repo/funding strains (for now), with the funding acquired via the STR no doubt helping on that front.
• Also note the lack of meaningful surprises in the DMO's quarterly operations calendar, which we covered in detail earlier.
• Domestic consumer credit and lending data is due later today, although spill over from Eurozone CPI & U.S. PCE are set to dominate.