Curve Steeper And Cheaper, Wider FI Moves Eyed

Stabilisation in Bunds spills into gilts, before fresh pressure for U.S. Tsys limits the rally from session lows.

• In the wider cross-market sphere, European gas futures sit a touch off bets levels, last +10%, while crude oil futures are off best levels and equities remain under pressure given higher yields and the negative lead out of China.
• Gilt futures last -70, although the technical trend structure remains bullish.
• On Sep 20, the contract breached resistance at 96.49, the Sep 14 high. The break of this hurdle confirms a resumption of the bull cycle that started Aug 17 and this opens the 97.00 handle. Key short-term support has been defined at 94.64, the Sep 18 low. A reversal lower and a break of this support would threaten the bullish condition and expose 94.05, the Sep 11 low.
• Cash gilts run flat to 8.5bp cheaper as the bear steepens, once again looking to wider core global FI.
• 2s10s hits the least inverted level seen since August, while 5s30s move to the steepest level seen since June.
• SONIA futures last show flat to -5.5 through the blues, steepening.