Firmer & Flatter, Hawkish Greene Comments Shrugged Off

Gilts have stabilised after comments from hawkish BoE dissenter Greene (with a particular focus on the potential for a higher for longer interest rate outcome) provided some brief and limited headwinds.

• A broader core global FI bid, lower oil prices and weakness in Chinese equities will have aided the early London bid, although crude oil futures have now moved away from lows as have the likes of e-mini futures.
• Gilt futures have operated above neutral levels since gapping higher at the open and last print +43, ~35 ticks off worst levels of the day.
• Well-defined technical parameters remain intact for the contract, which has stuck comfortably within the confines of the range seen on Wednesday.
• Cash gilt yields run 6-8bp lower, with a light flattening bias in play.
• SONIA futures now sit flat to 4.5bp firmer through the blues, aided by the second round of gilt buying. The reds outperform on the strip.
• BoE-dated OIS is little changed to 5bp softer on the day, with the path outlined by market pricing little changed vs. what we outlined shortly after the STIR market open, despite swings that followed gilts.