Bulk Of Early Recovery Holds

Gilts have followed core global FI peers away from yesterday’s lows.

• Futures are +9 at 95.69, off highs of 95.81.
• Yesterday’s low (95.33) presents initial technical support, with bears in control at this stage. Bulls need to overcome yesterday’s high (96.43).
• Yields are 2-5bp lower, with the curve bull steepening.
• This leaves all of the benchmark yields a little shy of yesterday’s multi-month/early ’24 highs.
• 10s outperform Bund and Tsy equivalents at the margin after yesterday’s widening.
• 2s10s and 5s30s stick within ranges seen in recent weeks.
• While there hasn’t been a true headline catalyst, desks have pointed to a mix of overnight Fedspeak, reduced supply pressure after the recently conducted Italian auctions and relatively attractive outright yield levels as supportive factors for wider core global FI markets this morning.
• Local headline flow hasn’t been particularly market moving.
• SONIA futures are flat to +1.5.
• BoE-dated OIS shows ~30bp of cuts through year end and a little over 50/50 odds of a 25bp cut come the end of the Sep MPC.
• The BoE will sell GBP600mn of long-dated gilts from its APF facility later today.