At/Just Shy Of Best Levels

Softer than average (but in line with the recent norms) cover at the latest round of short-dated BoE APF sales provides a limiting factor for gilts in recent trade, before a fresh bid kicks in, aided by U.S. housing data. Bulls are unwilling to push too far above 96.00 in futures, at least for now.

• That leaves the contract +65 at 96.05, just shy of best levels.
• Meaningful technical resistance isn’t seen until the upper end of the 96 handle.
• Cash gilt yields last show 5-6.5bp lower, with 5s leading the rally still.
• Much of the domestic focus has been on the early Monday comments from BoE Governor Bailey, although we noted that Bailey provided reiterations of previous comments. Markets looked more to the dovish elements of the speech, although that may have been more of an excuse for profit taking after the recent run of hawkish repricing.
• Bund-supportive factors flagged elsewhere have also factored into price action.
• SONIA futures last little changed to 11bp firmer, a touch shy of best levels.
• BoE-dated OIS is 0.5-9bp softer on the day (see earlier bullet for exact measures re: degree of rate of cuts priced).