Cheaper To Start The Week, BoE Terminal Rate Pricing Consolidates Below 6.50%

Gilts generally follow the broader core FI/cross-asset gyrations outlined earlier, opening lower, then firming until futures failed to close the opening gap lower. Since then the contract has drifted, sitting circa 30 ticks lower on the day at typing. Cash trade sees a parallel 3-4bp of cheapening across the curve.

• SONIA futures twist steepen across the wider strip.
• BoE-dated OIS is little changed to 3bp softer, with terminal policy rate pricing hovering around 6.45% after Friday’s NFP-facilitated adjustment lower.
• Comments from BoE’s Bailey headline the domestic docket today. A quick reminder that he stressed the need to bring inflation down to the Bank’s target over the weekend, while playing down any need to alter the 2% goal.
• Elsewhere, headlines surrounding domestic utility companies continue to cross, but they haven’t moved the needle for Gilts.