Dip In DMP Wage Expectations Provides Support, A Little Under 40bp Of '24 BoE Cuts Priced

The decline in the expected wage growth metrics in the latest BoE DMP survey supports gilts and allows SONIA futures to rally, with the news no doubt welcomed by the BoE (albeit with the pace in the moderation still being somewhat disappointing).

• That leaves yields 2.5bp lower to 0.5bp higher across the curve, twist steepening.
• Tuesday’s yield lows present the target for bulls, protecting May lows.
• Gilt futures still stick to a narrow 26-tick range, registering a fresh session high of 97.72 on the data, before retracing back to 97.65.
• Tuesday’s low and high (97.08 & 97.86) present initial support and resistance, with recent gains in the contract still deemed corrective.
• SONIA futures are flat to +4.0 through the blues, with the reds leading the rally. Contracts are back from initial DMP-driven highs, operating in a similar manner to gilts.
• ~37.5bp of cuts are priced through year end, with a little over 15bp showing through the Sep MPC and ~29bp of easing showing through the Nov meeting.
• More broadly, local headline flow remains centred on political matters, with the Conservatives still trailing heavily in the polls and Monday’s Sunak-Starmer debate still being assessed/critiqued.
• Further afield, the ECB’s latest monetary policy decision will provide the macro focal point today. Any guidance surrounding the future path of monetary policy is set to garner the most attention, assuming the widely telegraphed and expected 25bp rate cut is delivered