Early, Modest Cheapening Fades

The light weakness in Bunds applies some modest pressure to Gilts at the open, before a bounce, leaving Gilt futures +5 or so, while the major cash benchmarks are flat to 1bp cheaper across the curve, with swaps generally incrementally tighter on the day.

• SONIA futures are mixed, running somewhere between -1.0 to +2.0 through the blues.
• BoE-dated OIS is essentially unchanged, with 50/50 odds of a 50bp hike at next week’s meeting seen, while terminal policy rate pricing shows just above 5.90%.
• Local news flow has been light since yesterday’s close.
• Event risk over the next 24 hours or so is dominated by offshore matters, with the FOMC & ECB monetary policy decisions front and centre.