Bear Flattening Seen Post-CPI

Gilt futures show as low as 98.82 post-UK CPI (release covered in detail elsewhere), before recovering to the 99.10-20 area, last -80 or so on the day.

• Technical support at the Dec 6 high (98.97) was breached on the move. A move through today’s base would expose a bit of a technical air pocket, with little support seen between there and the Dec 11 low (97.39).
• Cash gilt yields are 7-13bp higher, as the curve bear flattens.
• The unwind of some of the easing priced into STIRS promotes that curve move.
• SONIA futures show flat to -15.0 through the blues, with the reds under the most pressure.
• BoE-dated OIS is relatively in line with pre-gilt open levels, showing ~116.5bp of cuts through ’24 (vs. ~130bp at yesterday’s close).
• Outside of the data, local headline flow has focused on the latest round of headwinds for PM Sunak, with resignations and rebellion seen within the Conservative Party re: the controversial Rwanda bill. This isn’t a meaningful input for markets, but further punctuates the PM’s struggles.
• UK house price data rounds off the local data docket today.
• Elsewhere, GBP3.75bn of 4.625% Jan-34 gilt supply is due.