Futures Under Light Pressure As Bunds Move Off Best Levels, CPI & BoE Speak Eyed On Weds

Gilts initially operated a touch above levels seen into Friday’s close, however, a move away from best levels in Bund futures has applied pressure, after the initial reaction to the previously covered overnight news flow (centred on softer than expected Chinese GDP data and a fresh downtick in crude oil futures).

• Gilt futures are -25, while cash Gilts twist flatten, running 1.5bp cheaper to 0.5bp richer.
• SONIA futures are as much as 4bp cheaper through the greens, with a steepening bias in play.
• BoE-dated OIS is 1-3bp softer on the day.
• Local headline flow was fairly restrained over the weekend. The most meaningful headline for markets probably came via confirmation that the opposition Labour Party would not look to alter the BoE’s inflation target if it wins the next election.
• The domestic docket is fairly thin over the next couple of sessions, with the already released Rightmove house price data pointing to familiar issues for the property market.
• The BoE will conduct 7- to 20-Year Gilt sales today.
• Wednesday will bring the key CPI data, the final such reading ahead of the August MPC gathering, while the same day will also see BoE Deputy Governor Ramsden speak on quantitative tightening.