Following The Broader Move Lower

Gilts look to the early weakness in U.S. Tsys & Bunds for guidance, last showing -25.

• Cash benchmarks are 1.5-3.5bp cheaper, with some modest steepening on the curve.
• We reflag the weekend FT story which noted that “hedge funds have been rushing to unwind bets against Britain’s £2.5tn government bond market as investors become increasingly convinced that the Bank of England is nearing the end of its rate rising campaign.”
• Broader weekend headline flow out of the UK focused on political tensions, with spending surrounding the Crossrail project, as well as further comments and potential policy moves from PM Sunak with an eye on next year’s election, at the fore.
• SONIA futures last show flat to -3.5, with volume still light and the early downtick in gilts biasing contracts lower.
• BoE-dated OIS sits either side of unchanged, with ~9.5bp of tightening showing for November and terminal policy rate pricing ~16.5bp above prevailing levels (i.e. roughly 2/3 odds of one further hike are currently priced).
• Lower tier local data is due on the domestic docket on Monday.