GILTS: Little Net Reaction To U.S. CPI

Little net reaction to the U.S. CPI data, with gilt futures back to pre-release levels at 100.45-50.

• Bears couldn’t quite close the opening gap higher during some brief post-data weakness, with the contract basing at 100.22.
• The technical backdrop remains bullish, with initial support at the 20-day EMA (99.26) still some distance away.
• Yields are 2-4bp lower across the curve, with the early UK CPI-driven bull steepening fully reversed as bull flattening comes to the fore.
• Gilts still outperform DM peers curve-wide following today’s softer-than-expected domestic CPI data.
• SONIA futures are flat to +5.0, also back from post-U.S. CPI lows, while BoE-dated OIS shows ~9bp of cuts for Sep & ~47bp of easing through year end, little changed vs. pre-U.S. data levels.