Extension Of Equity Recovery Weighs

Gilts are weaker again, with equity benchmarks recovering further from Monday’s lows.

• Futures -52 at 99.44, although bears have been unable to test initial support at the Jun 21 high (99.23).
• Yields 2-4bp higher across the curve, bear steepening. Benchmarks are 19-25bp off Monday’s lows.
• SONIA futures flat to -7.0.
• BoE-dated OIS shows ~10bp of cuts for next month’s meeting & ~43bp of easing through year-end.
• Dec ’24 MPC pricing showed a little over 65bp of cuts at one point on Monday.
• 5-Year gilt supply saw disappointing demand, with the cover ratio running comfortably below average and low price printing below pre-auction mids.
• The local data calendar is limited until next week’s labour market and inflation readings, leaving wider market sentiment at the fore.