Gilts Still The Underperformer Vs. Core Peers

Little to flag when it comes to fresh drivers for core global FI markets since our most recent updates, with gilts still the underperformer in the space post-UK PMIs, while Tsys have looked to late Tuesday inputs for some support for most of the day.

• Digestion of the latest RRR cut from the PBoC also factored into early London cross-asset trade on Wednesday.
• Core bond futures are off best levels of the day, albeit to varying degrees.
• A modest downtick in crude oil futures may have provided some support for bonds in recent trade,
• U.S. Tsy yields are 1.5-3.0bp lower on the day, with 7s leading.
• German yields are 2-3bp lower across the curve, with the 5- to 7-Year zone leading. Mixed but still contractionary European PMI releases factored into early movements.
• Peripherals are generally a touch tighter to Bunds, although supply footprints in PGBs leave the 10-Year PGB/Bund spread little changed on the day, as Portuguese paper underperforms peers.
• Gilt yields are 1-3bp higher on the day as the curve bear flattens, although the space is back from session extremes. BoE-dated OIS last prices ~94.5bp of cuts through ’24, ~2bp off post-data extremes.