BONDS: Strong Start To Busy Central Bank Week

Gilt and Bund futures have started the week on a strong note, each around 50 ticks higher versus Friday’s settlement levels. 

• Bund futures are +50 today at 133.22. An earlier breach of last Thursday’s high at 132.92 has exposed the bull trigger at 133.21 (June 14 high). 
• A clear breach of this level would reinforce the bullish technical picture, with 133.42 (a Fibonacci projection level) seen next on the upside.
• In Gilts (+53 ticks today at 98.76), next resistance is seen at 98.93 (Jul 18 high) before key resistance at 99.23 (June 21 high).
• A modest dovish repricing of BoE rate cut expectations ahead of Thursday’s meeting has allowed Gilt yields to fall, with 2-year yields almost 6bps lower today (albeit now off intraday lows).
• The German curve has lightly bull flattened, while 10-year peripheral spreads to Bunds are little changed.
• UK Chancellor Reeves’ statement on public finances headlines today’s calendar, with Euro area July inflation, preliminary Q2 GDP reports and the BoE meeting in focus later this week.
• The Fed and BoJ meetings also provide spillover potential on Wednesday.