Firmer Ahead Of Gilt Trade

SONIA futures are biased higher in pre-gilt trade, with the contracts running flat to 5bp richer through the blues, as the greens lead the rally.

• The move comes alongside a bid in core global FI markets, first seen in Asia-Pac hours, before a fresh bid developed as European participants reacted to the Asia-Pac move.
• The bid in bonds has moderated a touch, with SONIA futures also off best levels as a result.
• Local headline flow has centred on continued signs of cooling in the labour market, most recently evidenced by the latest REC survey.
• BoE-dated OIS continues to show ~21.5bp of tightening for this month’s MPC gathering, while terminal policy rate pricing is a little over 40bp above prevailing levels, after the BoE speak/DMP combination seen in recent days weighed on pricing,