Catch Up Cheapening Observed, But Off Worst Levels

Some post-long weekend catch up to Monday’s weakness in core global FI markets biased Gilt futures lower at the re-open, although the previously touted weakness in broader equity markets has seemingly allowed the contract (and broader Gilt space) to find a bit of a base, leaving it ~20 ticks off of worst levels, down 15 or so ticks on the day, after Friday’s post-NFP base was respected. Cash Gilts are 1-2bp cheaper across the curve.

• Lower tier domestic data (Halifax house prices & BRC LFL retail sales) has come and gone, with nothing in the way of meaningful market impact, as you would expect.
• As noted elsewhere, cost of living pressures (albeit with energy prices well shy of their well-documented, recent peaks) and the political backdrop continue to garner the bulk of the domestic headlines, while terminal BoE pricing hovers in the familiar 4.90-5.00% window at typing.
• Expect the space to take its cues from wider markets and headline flow today, given the lack of domestic risk events tabled and the proximity to Thursday’s BoE decision (with a 25bp hike more than 90% priced come the end of that meeting).