Firmer As Wage Data Counters global Impulses

After trading either side of unchanged to start the day, the combination of the previously covered domestic wage data and the move lower in equities seems to provide support for gilts.

• That leaves futures through yesterday’s high, +20 or so at ~100.30, just off the peak of an early 43-tick range.
• Technically, gilt futures are in consolidation mode. Recent price action appears to be a bear flag - a bearish continuation pattern that signals scope for a move lower near-term. The recent breach of the 20-day EMA, also suggests scope for a continuation of the current bear cycle. This has exposed support at 98.97, the Dec 6 high. On the upside, initial firm resistance to watch is at 101.98, the Jan 3 high. A break would ease bearish pressure.
• Cash gilt yields are 1.5-3.0bp lower across the curve, with a light steepening bias.
• The domestic data has helped take the edge off the wider weakness seen in core global FI markets overnight, with a focus on expectations for a sizeable downside surprise in December’s private regular AWE growth vs. BoE forecasts.
• SONIA futures flat to +5.0, with BoE-dated OIS is little changed on the day across ’24 contracts.
• GBP1.5bn of 0.75% Nov-33 I/L supply is due today.
• As we have noted elsewhere, BoE Governor Baileys scheduled address is being rescheduled.