Front End Continues To Outperform

Futures continue to trade below early highs, with global equity indices off lows and core global STIRs back from dovish extremes.

• +39 at 100.94 after topping out at 101.11.
• Bulls didn’t manage to test resistance at the 2.00 projection of the May 29- Jun 4-10 price swing (101.18).
• Gilt yields are 3-8bp lower on the day, recent bull steepening extends.
• 2s hover just above 3.50% (3.53%) last, falling by 38bp since the July 26 close.
• Bulls looks to force 10-Year yields below 3.80% in a bid to test the Feb low (3.726%).
• 2s10s has registered fresh ’24 highs, 5s30s has been capped ahead of its January peak.
• SONIA futures last +0.5 to +13.0.
• BoE-dated OIS shows ~14.5bp of cuts for next month’s meeting vs. 11bp late Friday, with a cumulative 56.5bp of easing priced through year end.
• The latter briefly pushed beyond 65bp of cuts this morning.
• Expect broader market sentiment to continue to dominate, with little of note on the domestic calendar for the rest of the day.
• Local news flow has seen continued speculation surrounding the potential for methodology tweaks which would give Labour room to deploy further borrowing.