Curve Flattens, Subdued Demand At Latest I/L Auction

Gilt futures are a little firmer after adjusting to Monday’s late uptick in U.S. Tsys. A subsequent pullback from session highs in wider core global FI has limited the move.

• Futures last +14 at 98.63, sticking to a very narrow 14-tick range thus far.
• The bullish technical picture for the contract remains intact. Initial resistance seen at 99.25, while initial support comes in at 98.21.
• Cash gilt yields are 0.5bp higher to 3bp lower, as the curve flattens.
• Both 2s10s and 5s30s have moved away from recent highs early this week.
• 2s10s last -12.7bp vs. ’24 highs of -5.8bp. 5s30s last 61.9bp vs. June highs of 68.2bp.
• GBP STIRs are essentially unchanged on the day, showing ~60% odds of a 25bp cut at the August MPC and ~47bp of cuts through year end.
• GBP1.5bn of 0.75% Nov-33 I/L supply saw subdued demand, with a dip in the cover ratio and the average awarded price printing below pre-auction mids.
• UK headline flow has been very limited.

Source: MNI - Market News/Bloomberg. 2025 meeting dates are estimated.