GILTS: Equity Pullback & Mann Softening Hawkish Tone Provide Support

A pullback in equities has supported core global FI, gilt futures briefly topped 100.00.

• Our macro team believe that the latest comments from BoE MPC member Mann were a lot less hawkish, providing further support.
• We can’t rule out Mann voting for a cut in November.
• While that wouldn’t change the outcome of the meeting (markets fully discount a 25bp cut) it could change the tone of BoE discussions further out, given that Mann was previously viewed as the most hawkish MPC member.
• The technical bull cycle remains in play for futures.
• Initial support seen at yesterday’s low (99.55), which protects the September 9 low (99.29). Initial resistance at the Sep 18 high (101.06).
• Yields ~2bp lower across the curve.
• STIRs saw some modest dovish adjustments in the wake of Mann’s comments.
• BoE-dated OIS show 26bp of cuts through the Nov MPC, ~40.5bp of easing through year-end and 125bp of cuts through June ’25.
• SONIA futures last -0.5 to +3.0.
• Elsewhere, retail sales data was firmer than expected but shouldn’t change the path of BoE policy.
• Public finance data for August revealed another round of higher-than-expected government borrowing, with risks already tilted to a move higher in the gilt issuance remit.
• Little of note on the UK calendar for the rest of the day.