GILTS: A Little Softer Alongside Peers, Size Of Likely Labour Majority Eyed

Gilts soften alongside global peers with an eye on EGB supply. Futures last -24 at 97.46.

• The bearish technical threat remains intact despite this week’s bounce.
• Initial support at the July 1 low (96.57). Meanwhile, yesterday’s high (97.78) presents initial resistance 
• Yields ~1.5bp higher across the curve.
• GBP STIR markets are in line with pre-gilt open levels. 
• The final round of opinion polls continued to point to a landslide victory for Labour come the end of today’s election. As a result, it will likely be the size of the Labour majority that dictates the market reaction.
• We have flagged downside risks to both GBP and gilts in the wake of the vote.
• A Labour majority of around 75-130 is probably the most positive outcome for markets - but is already closed to being priced in.
• In this scenario Labour would have a large enough majority to not be held hostage by a small number of hardliner MPs but would also not have such a sizeable majority to encourage Starmer and Reeves to leave the middle ground.
• BoE DMP data is also due today.