Cheaper & Steeper To Start ’24, Little Counter From Final Manufacturing PMI

The impetus from an uptick in crude oil prices and a brisk start for corporate IG issuance has pressured core global FI markets during the initial stages of ’24 trade.

• Gilt futures show below 101.60, losing a little over 100 ticks on the day.
• Initial technical support in the form of the Dec 19 high (102.05) was breached in the process. The next area of meaningful technical support is seen at the 20-day EMA (100.78), which protects more meaningful support at the Dec 13/gap high (100.20). Still, the technical uptrend in the contract remains intact, even as it sits 240-250 ticks shy of last week’s multi-month high.
• Cash yields are 9.5-12.5bp higher, with the curve bear steepening.
• 10-Year gilt yields are ~22bp off last week’s multi-month low and have closed the Dec 20 gap lower.
• A modest mark lower in the final domestic Dec manufacturing PMI release (46.2 vs. 46.4 flash) had no lasting impact on the space.
• SONIA futures are flat to -5.5 on the day, generally a little above worst levels.
• BoE-dated OIS stabilise a little above hawkish extremes, last showing ~147bp of cuts for ’24, with the first full 25bp cut fully discounted come the end of the May ’24 MPC gathering.