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Futures Test Key Resistance

GILTS

Weak retail sales data and the resulting dovish pre-gilt open moves in SONIA futures/BoE-dated OIS have extended as gilts rally (a bid in wider core global FI has also helped). SONIA futures are little changed to +8bp, while BoE-dated OIS is little changed to 9bp softer.

  • Gilt futures have moved through initial resistance levels and bulls now test key resistance at the July 19 high (97.84). If we see a meaningful break beyond there (97.86 high as of typing) then there isn’t much until the May 22 high (98.98).
  • Note that 10-Year gilt yields have moved through their early June lows, sitting less than 4bp away from 4.00%.
  • Cash gilt yields are 9-10bp lower on the day.
  • As noted elsewhere, after close comments from BoE hawk Mann centred on productivity, with little else of note. Fellow BoE MPC members Greene and Ramsden will speak later, although we remind that both spoke on Thursday.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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