GILTS: Remaining Underpinned

Core global FI markets continue to adjust to increased odds of a 50bp cut from the Fed, underpinning bonds

• Gilt futures last 101.50 after peaking at 101.53.
• The technical set up is still bullish with the Sep 12 high (101.51) pierced. Any fresh extensions higher are set to target a Fibonacci projection (101.78).
• Yields 1.5-2.5bp lower on the day, light bull steepening.
• 30-Year supply saw a wide tail, although a very healthy average price vs. prevailing mids at the bidding cut off time limited any market feedthrough.
• Curve marginally steeper since the auction.
• SONIA futures little changed to +2.5.
• Event risk picks up over the next 48 hours or so, with U.S. retail sales, UK CPI the FOMC and BoE decision all due.
• BoE-dated OIS shows ~5bp of cuts for Thursday, ~53bp of easing through year-end and ~142bp of cuts through June ’25.