GILTS: Futures To Fresh Dec Low, Spread To Bunds Testing 220bp Again

Gilts follow peers lower at the open, reacting to yesterday’s late extension lower in Tsys and with oil futures consolidating yesterday’s rally.

• Futures through yesterday’s base to register lowest levels of the month at 94.89.
• Initial support at the Nov 25 low (94.66). Bulls ultimately target key support at the Nov 18 low (93.40).
• Yields 2-3bp higher across the curve.
• 10s last 4.35%, 16bp off their Dec low. The Nov 25 high at 4.388% presents the next upside area of interest.
• Gilt/Bund spread threatening to break back above 220bp after yesterday’s widening episode faded back to ~219bp come the close.
• GBP STIRs 0.5-1.0bp more hawkish than levels seen ahead of the gilt open, showing ~79bp of BoE cuts through ’25.
• Little of note on the UK calendar today, which will leave focus on spillover from the ECB decision and U.S. data.