Curve Bull Flattens A Touch, Supply Has No Lasting Impact

Gilts have flattened, following the lead from the U.S. curve.

• The major cash benchmarks run 1-3bp richer, while futures are +35.
• The light flattening move came despite the presence of this morning’s GBP3.5bn 3.25% Jan-33 supply.
• The auction saw a slightly softer bid to cover and wider tail than the previous auction, but had little impact on the market, with the space operating around best levels of the day at typing.
• SONIA futures are -0.5 to +3.5, as the strip twist flattens.
• BoE-dated OIS is little changed from early levels, showing 21.5bp of tightening for next month, with terminal policy rate pricing hovering just shy of 5.80%, back from firmest levels of the session.
• Ranges remain contained, while headline flow is light.