Firmer Alongside Peers, Scale Of Likely Labour Majority Eyed

Gilts see a modest rally as Bunds and Tsys tick away from early London lows.

• Futures +19 at 97.09, a little below yesterday’s high (97.23).
• Bulls need to retake the 20-day EMA (97.72) to negate some of the recent bearish pressure. Initial support is located at the July 1 low (96.57).
• Cash gilt yields are 0.5-2.0bp lower across the curve, within recent ranges.
• Several final opinion polls point to a record majority for Labour, with the degree of that majority set to be the defining factor when it comes to Friday’s initial post-election reaction.
• Citi believe that “the election aftermath leans positive for gilts, primarily via its likely indirect influence on monetary policy & the start of a period of fiscal consolidation.”
• Final services and composite PMI readings headline today’s UK calendar. That data shouldn’t be a meaningful market mover, leaving focus on wider macro matters e.g. the ECB’s Sintra forum and U.S. data.