Away From Session Lows, Global Dynamics & APF Demand Helps

Gilts have recovered from session cheaps alongside wider core global FI markets.

• The recently conducted round of BoE APF sales covering medium-terms gilts generated decent demand, which will be adding a further leg of support to gilts.
• Domestic fiscal speculation continues to do the rounds, as we have covered elsewhere. The PM and Chancellor chose to focus on the supply side of the economy in related remarks, which has provided a more limited feedthrough for gilts than a greenlight re: household tax cuts would have (a reminder that Sunak and Hunt didn’t completely close the door on the latter).
• Gilt futures last print around 97.10, -10, but 40+ ticks from session lows. That leaves the short-term bullish trend parameters intact, with initial technical boundaries untouched.
• Cash gilt yields are little changed to 1bp higher on the day.