September 23, 2024 09:40 GMT
GILTS: Pullback From PMI-Driven High Extends
GILTS
Gilts extend their pullback from session highs.
- Bulls tested 100.00 in futures after UK PMIs added to the soft run of survey readings seen this morning, before easing to 99.60.
- The bullish technical picture remains intact in the contract, despite the recent correction.
- Bulls ultimately need to break the Sep 17 high (101.54) to reignite the uptrend.
- Yields little changed to 2.5bp lower on the day, curve steepening.
- We noted that there was some downside risk to the PMIs on the back of the European readings/UK GfK consumer confidence data, making the miss less of a ‘surprise’ and helping explain the market reaction.
- All in all, the data supports the idea a November cut from the BoE but shouldn't move the dial too much for December at this stage.
- STIR markets agree with this assessment, showing 41bp of cuts through year-end and ~128bp of cuts through June ’25, little changed from early Monday levels.
- SONIA futures last 0.5-6.0 higher on the day, back from highs, with much of the rally coming after settlement on Friday.
- Comments from Chancellor Reeves are now eyed, we wrote a little more on that here.
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