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GILTS: Contained Rally

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Gilts draw support from the weakness seen in Chinese stocks into the mainland close.

  • Futures initially trade above yesterday’s high, peaking at 96.76, before fading back to 96.65. at typing.
  • The overarching technical picture in that contract remains bearish.
  • Bulls need to breach the Oct 7 high & Sep 2 low (96.93/98.11) to start turning the tide in their favour.
  • Reports pointing to an increase in infrastructure spending, seemingly set to be facilitated by the widely expected fiscal rule tweak, may be capping the bid (more on that shortly).
  • Presence of this morning’s GBP3.75bln 4.25% Jul-34 gilt supply also a likely limiting factor.
  • Yields little changed to 1.5bp lower, bull steepening.
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Gilts draw support from the weakness seen in Chinese stocks into the mainland close.

  • Futures initially trade above yesterday’s high, peaking at 96.76, before fading back to 96.65. at typing.
  • The overarching technical picture in that contract remains bearish.
  • Bulls need to breach the Oct 7 high & Sep 2 low (96.93/98.11) to start turning the tide in their favour.
  • Reports pointing to an increase in infrastructure spending, seemingly set to be facilitated by the widely expected fiscal rule tweak, may be capping the bid (more on that shortly).
  • Presence of this morning’s GBP3.75bln 4.25% Jul-34 gilt supply also a likely limiting factor.
  • Yields little changed to 1.5bp lower, bull steepening.