Firmer To Start, Offshore Matters Dominate

Gilts rally at the open, with a lack of hawkish commentary from BoJ Governor Ueda and no firm pushback against JPY weakness noted.

• Futures are still sub-96.00 but have seen a ~50-tick recovery from yesterday’s cycle low to last trade around 95.854.
• The technical backdrop remains bearish.
• Gilt yields are ~2bp lower across the curve.
• SONIA markets are little moved, operating around pre-gilt open levels.
• UK headline flow has been limited since yesterday’s close.
• Pricing of BoE cuts operates at the shallower end of the recent range, with feedthrough from Fed pricing continuing to have a meaningful impact. Comments from BoE leadership (Bailey & Ramsden) have been more dovish than recent offerings from Greene & Pill, perhaps pointing to the potential for some divergence from Fed policy as ’24 develops.
• The UK calendar is very limited into the weekend, which will leave focus on cross-market moves and macro headlines.