Early Weakness Extends

The early weakness in gilts has extended, although bears haven’t forced a test of 98.00 in futures (98.08-46 range).

• Initial (and key) support sits at 97.23, with the current bull cycle still in play above there.
• Cash gilt yields are ~2.5-3.0bp higher across the curve.
• Hawkish spill over from the latest ECB speak provided the initial driving factor for the move, while another government mention of the potential for/aim of pre-election fiscal easing may have also factored in.
• SONIA futures have softened alongside gilts & EUR comparables, last flat to -7.0, with the late reds and early greens leading the move.
• BoE-dated OIS still prices slightly greater than even odds of a cut at next month’s MPC, with ~56bp of easing priced through year end.
• Comments from BoE’s Mann haven’t been pertinent for broader monetary policy matters.
• The UK calendar is effectively empty ahead of the weekend.