Futures Through Initial Technical Support, Off Lows After Syndication Prices

Gilt futures started the early London afternoon at/around session lows after a break of initial technical support in the form of the August 29 base opened the way for a possible technical reversal.

• Weakness in Bunds & U.S. Tsys, coupled with supply-related pressure, had biased the space lower during the morning.
• The contract last prints -30 or so, while cash benchmarks are 0.5-2.5bp cheaper as the curve bear flattens at the margin.
• The passage of the pricing re: the new 4.00% Oct-63 syndication seems to have allowed the space to breathe a little, moving away from session cheaps.
• The syndication pricing/demand went smoothly, although the amount allotted was at the lower end of our own expectations (which would have aided the pricing side, all else equal). Allocations will be given at some point this afternoon.
• Local headline flow remains light.