Firmer To Start, Labour’s Medium-Term Plans Eyed

Gilts firm alongside global peers, with little UK-specific market reaction after Labour attained a commanding majority in parliament.

• Futures last +23 at 97.57, initial resistance at Wednesday’s high (97.78).
• Still, short-term bearish technical risks are noted despite the recent bounce. Initial support seen at the July 1 low (96.57).
• Cash gilt yields ~2bp.
• Labour’s fiscal plan will provide a key point of interest for gilt traders as their first term progresses, with the party being relatively successful when it comes to playing down related worries during the election campaign. CGT matters will likely dominate here, while the size of the majority may embolden policymaking.
• The UK calendar is sparse, leaving focus on the election fallout and U.S. NFPs.
• Monday will see the REC/KPMG report on jobs and the first round of post-election BoE communication, coming from the hawkish Haskel.