Bear Flattening Early On

Gilt futures look through yesterday’s low after dealing either side of late Tuesday levels around the open, before ticking away from session lows, leaving the contract just below flat on the day. Cash Gilts run little changed to 4bp cheaper, as the 2-/10-Year curve bear flattens to fresh inverted cycle extremes, with 2-Year yields registering a fresh cycle high.

• Terminal pricing on the BoE-dated OIS strip settles around the 6.30% mark in policy rate terms.
• The SONIA strip steepens, showing flat to -3.5 through the reds at typing.
• Domestic headline flow has remained focused on the housing market, which has seen steeper discounting in recent times.
• Looking ahead, BoE Governor Bailey will participate in a 4-way panel with the chiefs of the Fed, ECB & BoJ this afternoon, while BoE’s Pill is set to speak this morning.
• Elsewhere, the DMO will return to the market, looking to sell GBP2.75bln of the 15-Year 3.75% Jan-38 line.