Futures Sub-95, Supply Eyed

Gilts run cheaper at them open, given the bias in broader core global FI markets, with futures gapping below yesterday’s lows as bears force a move sub-95.00, trading as low as 94.82, before bouncing to 94.95.

• Technically, key short-term support to watch has been defined at 94.64, the Sep 18 low. The contract traded lower Monday, a continuation and a break of 94.64, would threaten the bullish backdrop and expose 94.05, the Sep 11 low.
• Cahs benchmarks show 2-2.5bp cheaper across the curve.
• 2s10s retook -50bp yesterday, moving towards August highs.
• 5s30s hovers just below 40bp, with the early June steeps in view.
• SONIA futures show flat to 3bp cheaper, with a light steepening move seen.
• BoE-dated OIS also steepens a touch on the day.
• The local economic data docket is empty.
• On the supply front, the DMO will come to market to sell GBP3.0bln of the 10-year 0.875% Jul-33 Green Gilt (see our latest Gilt Week Ahead for more on issuance matters and domestic event risk later this week).