Another Resistance Level Breached In Futures, Fresh 2-Month Lows For 2-Year Yields

Gilt futures trade to fresh session highs, with political uncertainty in France continuing to underpin core global FI markets.

• Futures last +83 at 98.76, with the resumption of the bull cycle that started on May 29 extending further.
• The 1.00 projection of the May 29 -Jun 4-10 price swing (98.65) has been breached, with bulls now targeting the nearby May 16 high/key resistance (98.89).
• Cash gilt yields are 4-6bp lower, with the curve bull flattening.
• 2s register fresh multi-week lows, while the remaining benchmarks haven’t tested May lows.
• Bulls now eye the early April low in 2-Year yields (4.136%), which is a little less than 5bp below prevailing levels.
• SONIA futures are little changed to +9.0 through the blues, at/just off highs.
• BoE-dated OIS shows ~44bp of ’24 cuts vs. ~42bp late yesterday, with 80% odds of the first 25bp cut showing come the end of the Sep MPC.
• Domestically, political headwinds remain evident for PM Sunak, with the Conservative party slipping behind the Reform UK party in the latest YouGov poll, in another first for British politics.
• The BoE-Ipsos inflation attitudes survey saw a ~0.2ppt fall in the 1-year ahead measure, while the 2- & 5-Year metrics held steady.
• The local schedule is effectively empty into the weekend, leaving wider macro matters at the fore.