Firmer, BoE Speak Eyed, Continued Fiscal Loosening Talk Provides Some Light Counter

The previously mentioned pre-election fiscal loosening speculation and spill over from BoJ JGB purchase tweaks probably helps limit the early uptick in gilts. Still, the space is comfortably richer on the day.

• Gilt futures move through last week’s high and the next Fibonacci resistance level to trade as high as 103.77, before backing off to trade around 103.65.
• A break of today’s high would expose 103.81, the 2.236 projection of the Nov 30-Dec 6-Dec 11 price swing.
• Gilt yields are 4-6bp lower across the curve, with bull steepening seen.
• SONIA futures draw some light support from the bid in the UK long end, last +0.5 to +5.0 through the blues, with light volumes seen there.
• Liquid BoE-dated OIS last show little changed to 3bp softer on the day.
• Continued digestion of BoE MPC member Haskel’s late Thursday (dovish) comments may be filtering in at the margin, given the lack of broad coverage of those comments on Friday.