Firmer On Broader Bond Bid But Off Best Levels, Bailey Helps Cap Rally

Gilt futures have followed swings in wider core global FI to start, initially firming before pulling back from best levels.

• Continued focus on the higher for longer mantra from BoE Governor Bailey may have aided the pullback as the initial spill over bid faded.
• That leaves gilt futures +15 or so around 97.00, ~30 ticks shy of best levels and ~10 ticks off pullback lows.
• Note that the bid ran out of steam just ahead of the 76.4% retracement of the Nov 17 - 24 downleg (97.39), which presents initial technical resistance. A move beyond there would expose the Nov 22 high (97.93).
• Cash gilts yields run 1-4bp lower at typing, with the belly outperforming.
• SONIA futures sit flat to +6.5bp, holding comfortably shy of early highs.
• BoE-dated OIS is flat to -4.5bp through ’24 MPC meetings, also off dovish session extremes.
• The previously flagged BoE speak (Bailey & Hauser), domestic credit & money supply data and GBP4.25bn of 3.50% Oct-25 gilt supply is slated for today (see more on that auction and broader gilt market matters in our Gilt Week Ahead publication: https://roar-assets-auto.rbl.ms/files/58201/GiltWeekAhead20231127.pdf )