Following EGBs Higher

Gilts gap higher as they assess Monday & early Tuesday price action elsewhere, although the forces limiting rallies in EGBs caps the move.

• That leaves the contract +35, with familiar ranges intact, although the contract is through Friday’s high.
• Cash benchmarks run 1.5-2.5bp richer, with some light outperformance for intermediates.
• The weekend saw BoE’s Broadbent deliver the higher for longer warning re: interest rates. He was also cognisant of the two-way risk surrounding the BoE’s tightening cycle i.e. may have done too much or may need to do more.
• Cooling shop price inflation was noted overnight, with a moderation in food price inflation helping the BRC shop price index to tick down to (a still elevated) 6.9% Y/Y in August vs. the 7.6% seen in July.
• Elsewhere, the weekend saw MP Nadine Dorries resign, which will trigger another by-election in a Conservative Party held seat.
• The DMO’s quarterly investor/GEMM consultation meetings headline a slim local docket today.