Cheapening Further, 2-/10-Year Spread Moves to Deepest Level Of Inversion Since Mini-Budget

Further headwinds for Gilts as 2s extend the move beyond their mini-Budget yield highs, while 5s move through their YtD yield peak but haven’t challenged their own mini-Budget extremes. The remainder of the major UK benchmark yields haven’t challenged YtD highs, which lie below mini-Budget extremes, with 10-Year yields showing just above 4.40% at typing. The major benchmarks run 2-19bp cheaper on the day, with the bear flattening impulse extending as the 2-/10-Year yield spread moves to the deepest level of inversion witnessed since the time of the mini-Budget.

• Gilt futures recently hit fresh session lows to print -85 or so at typing. Bears look to the May 26 low and bear trigger (94.21) as the next meaningful level of technical support.
• SONIA futures sit as much as 27.5bp cheaper through the reds, while the BoE-dated OIS strip points to terminal rate pricing of just below 5.80%.
• Rhetoric from incoming MPC member Greene has been crossing as she appears at her TSC confirmation hearing. Greene’s initial comments seemingly place her in the centre-slightly hawkish zone of the BoE spectrum, which is distinctly at odds with her dovish predecessor, Tenreyro.