Futures Little Changed, SONIA Off Early Lows As Wage Details Assessed

Gilt futures digest the mixed dynamics observed in the domestic wage data (covered on several occasions previously) trading either side of unchanged early on.

• Technically, gilt futures maintain a firmer tone and the latest pullback is considered corrective. Initial lines in the sand remain located at 94.11/96.14
• Cash gilt yields are 0.5-1.5bp higher on the day, with a light flattening bias seen. 2s10s trades a little above recent lows, while 5s30s prints fresh month-to-date flats.
• SONIA futures are little changed to 1bp higher through the blues, recovering from session lows as participants continue to digest the underlying wage data.
• BoE-dated OIS is also little changed on the day, reversing an early.modest tick higher..
• Comments from BoE dove Dhingra (on ‘food supply and inflation’) and chief economist Pill (on ‘what next for central banks?’’) will filter out today.
• A quick reminder that MPC hawk Mann spoke on Monday, as she flagged that climate shock presents the risk of more persistent inflation.
• Speculation surrounding the ramifications of yesterday’s government cabinet reshuffle continue to dominate the local press.
• UK Chancellor Hunt noted that it is “heartening” that inflation is “falling” and real wages are growing. He also noted that the Budget will set out plans to get people bank into work and deliver growth for the UK.