Futures Pressured, Curve Steepened

Gilts have been biased lower given the post-Thursday close weakness in U.S. Tsys (centred on the well-documented poorly received 30-Year Tsy auction and the latest musings from Fed Chair Powell).

• Domestic headline flow has been relatively muted since yesterday’s close, while this morning’s UK economic data failed to provide anything in the way of meaningful market impetus.
• That has left the aforementioned U.S. drivers at the fore.
• Futures traded as low as 94.89 in recent trade, ~125 ticks off yesterday’s multi-week high..
• Technically, the contract still maintains a short-term bullish tone. Firm support to watch is 92.63, the Nov 1 low, while initial support is seen at 94.03, the 50-day EMA.
• Cash gilt yields run 2.0-6.5bp higher as the curve steepens, with 2s10s and 5s30s ticking away from month-to-date lows.
• SONIA futures last trade +0.5 to -9.0bp, twist steepening.
• BoE-dated OIS is little changed to ~3.5bp firmer on the day, a little shy of early hawkish extremes.