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Futures Through Key Support On CPI Data

GILTS
Bank Of England (BOE) Market NewsHomepageBond Market NewsBulletMarketsFixed Income Bullets

The hawkish repricing following the UK CPI data sees gilt bears initially push futures comfortably below 97.00, basing at 96.83, before retaking 97.00.

  • Key support at the May 14 low (97.23) has given way, with any fresh extension lower set to expose the May 3 low (96.43). The latter protects the April 25 low and bear trigger (95.36).
  • Cash gilt yields are 7-14bp higher, with 5s leading the sell off.
  • Bears will start to eye the April yield highs if fresh weakness is seen.
  • 2s10s and 5s30s hit fresh multi-week flats.
  • SONIA futures are 0.25 to 15.0bp lower, off initial session lows.
  • Late Tuesday saw BoE Governor Bailey suggest that reserves are likely to settle at GBP345-490bn, while he expects a significant uptick in repo operation usage.
  • The April Brightmine survey revealed an uptick in in the 3-month Y/Y wage deal reading vs. March (+4.9% from +4.6%)
  • Comments from BoE’s Breeden are due later today, although she will appear on a panel focused on macroprudential matters, which will likely limit the scope for broader monetary policy discussions.
  • GBP4bn of 4.125% of Jul-29 gilt supply is also due today.
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The hawkish repricing following the UK CPI data sees gilt bears initially push futures comfortably below 97.00, basing at 96.83, before retaking 97.00.

  • Key support at the May 14 low (97.23) has given way, with any fresh extension lower set to expose the May 3 low (96.43). The latter protects the April 25 low and bear trigger (95.36).
  • Cash gilt yields are 7-14bp higher, with 5s leading the sell off.
  • Bears will start to eye the April yield highs if fresh weakness is seen.
  • 2s10s and 5s30s hit fresh multi-week flats.
  • SONIA futures are 0.25 to 15.0bp lower, off initial session lows.
  • Late Tuesday saw BoE Governor Bailey suggest that reserves are likely to settle at GBP345-490bn, while he expects a significant uptick in repo operation usage.
  • The April Brightmine survey revealed an uptick in in the 3-month Y/Y wage deal reading vs. March (+4.9% from +4.6%)
  • Comments from BoE’s Breeden are due later today, although she will appear on a panel focused on macroprudential matters, which will likely limit the scope for broader monetary policy discussions.
  • GBP4bn of 4.125% of Jul-29 gilt supply is also due today.