Firmer On The Day But Recent Highs Intact

Gilts broke through Friday’s peak on the second attempt, before bulls failed to force a meaningful test of 93.00.

• The contract has subsequently backed away from best levels to last trade +60 or so, while cash gilts are 1-3.5bp richer, with the wings lagging the bid in the belly/intermediates.
• A move in futures beyond 93.00 would expose 93.18, the Oct 3 high.
• Local headline flow has been subdued since the open, leaving wider market swings/the broader macro tone at the fore.
• Geopolitical worry surrounding weekend events in Israel provides the driving factor thus far.
• SONIA futures show flat to +5bp through the blues, flattening, with most contracts a little shy of best levels.
• BoE-dated OIS show unchanged to 4bp softer, with that strip also flattening.
• A quick reminder that BoE MPC member Mann will participate in a panel discussing the topic of ‘What have we learned about Inflation Dynamics?’ The panel discussion will get underway at 21:00 BST.