Bears Eye Key Support Levels As BoE Nears

Gilt futures open lower, in sympathy with the moves in wider core global FI markets since yesterday’s close, hovering just above 100.00. Cash 10s are 2.5bp away from their YtD high (3.899%), which presents a key technical line in the sand ahead of this week’s BoE meeting (see our full preview of that event here). A move beyond that point would open levels not witnessed since the downdraft from former PM Truss’ ill-fated fiscal foray.

• In futures, a breach below 100.00 would expose key support at 99.73, the Apr 19 low. A break of this level would cancel recent bullish developments and highlight a resumption of the downtrend that started on Mar 20.
• The latest KPMG/REC labour market report noted that “recruitment activity remained dampened by lingering economic uncertainty and subsequent hesitancy around hiring. Notably, permanent placements fell for the fifth straight month, while temp billings growth was mild overall. Candidate shortages also contributed to the slowdown in hiring activity, though the latest drop in labour supply was the softest seen for nearly two years. Vacancies data showed a relative improvement in growth of demand for staff, however, helped by a quicker rise in permanent vacancies. Pay pressures remained sharp overall, driven by the rising cost of living and competition for scarce candidates.”
• Cross-market impetus and the aforementioned technical lines will garner much of the focus today, with 3.25% Jan-33 Gilt supply the only point of domestic interest on today’s local docket.