Early Uptick In Futures Unwound, Curve Twist Flattens

Gilt futures nudged higher at the open, alongside wider core global FI markets, with U.S. & European equity index futures on the defensive, before some selling was seen across core global FI markets. Gilt futures briefly reclaimed 97.50 before fading back below to last trade -15 or so. Technically, the 50-dma guided prices lower across the past three months and the close above the mark is a bullish signal. Short-term positive momentum has strengthened, and the rally is yet to trigger an overbought condition. Round number resistance at 98.00 and the 100-dma are the next key upside levels for bulls.

• Cash Gilts run 3bp cheaper to 1bp richer, with twist flattening in play on the curve.
• A quick reminder that late on Wednesday we saw BoE’s Ramsden signal support for a careful increase in the pace of QT, while he also noted that inflation persistence is running above levels that the Bank expected in May. He gave very little on the short-term implications of the recent run of data re: monetary policy, sticking to the BoE strap line re: inflation & further tightening.
• SONIA futures sit flat to -5.5 through the blues. With reds leading the move lower.
• BoE-dated OIS steepens a touch, as terminal policy rate pricing rises above 5.90% once again.
• While the local data docket is non-existent, the UK will see three by-elections conducted today, with well-documented headwinds for the ruling Conservative Party noted.