Following Core Peers Cheaper At Open

Gilts follow core global FI markets cheaper, with futures looking through Thursday’s low after gapping lower. The contract last shows -25, a little off early lows. Initial technical support is seen at the Oct 11 low (93.95).

• Cash gilts are 3-4bp cheaper, steepening a touch.
• SONIA futures are flat to -2.5 through the blues, while BoE-dated OIS contracts are essentially unchanged.
• Weekend comments saw BoE Governor Bailey note that the last mile in the fight against inflation will be the toughest, while stressing that the weak GDP growth outlook complicates BoE policy. He also noted that he is “puzzled” by the UK’s stubborn rate of pay growth.
• Meanwhile, outgoing BoE Deputy Governor Cunliffe supported the higher for longer narrative re: interest rates.
• Other news flow saw focus on well-documented headwinds surrounding the domestic housing market, while one survey revealed the potential for lower than usual seasonal Christmas purchases owing to inflation.
• BoE speak from Pill headlines the domestic docket today, with tier 1 domestic data due later in the week.