Firmer To Start, 10s Move To 4.40%

Gilts outstrip the rally in EGBs early Thursday.

• Futures are comfortably through yesterday’s high, last trading +90.
• A bearish theme in Gilt futures remains intact, however, a strong rally yesterday suggests the contract remains in a short-term corrective cycle. Price has traded through the 20-day EMA, with bulls forcing a look above the 50-DMA early today. A meaningful break above 95.00 would expose 95.82, the high from August 10 and key short-term resistance.
• Cash benchmarks run 4.5-7.5bp richer, with 10s outperforming.
• As noted elsewhere, 10-Year yields have found support around 4.40%, with only limited moves below the level seen in early trade.
• SONIA futures sit flat to 6.5bp richer through the blues.
• BoE-dated OIS is little changed to 5bp lower as the strip flattens. A steady 28.5bp of tightening shows for next month, with terminal policy rate pricing just above 5.85%.
• The latest RTRS poll pointed to a slim majority looking for one more hike from the BoE in the current cycle (in September), although most noted hawkish risks to their projections.
• Only lower tier local data is due today.