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GILTS: /STIR: Open Firmer Following Long Weekend

GILTS
BulletFixed Income Bullets

Gilt futures (U4) have opened higher as UK markets return from the long-weekend, catching up with yesterday’s rally in EGBs.

  • Dovish ECB speakers and some fresh geopolitical angst supported EGBs yesterday, though volumes and liquidity were limited by UK and US holidays.
  • The May BRC shop price index (released overnight) will have also provided support, recording the slowest annual price growth since November 2021 at 0.6% Y/Y (vs 1.0% cons, 0.8% prior).
  • That leaves futures +35 at 97.26, with a breach of the May 23 high at 97.44 needed to allow for a stronger near-term recovery.
  • Gilt yields are -3.5 to -4.5bps, with the curve bull steepening.
  • A reminder that all public appearances by BoE officials have been cancelled until after the General Election on July 4.
  • SONIA futures are +1.0 to +5.0 ticks through the blues, with BoE-dated OIS pricing ~35bps of easing through the remainder of ’24.
  • Today’s domestic calendar includes CBI Distributive Trades data for May.
Meeting DateSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Jun-245.195-0.5
Aug-245.111-8.9
Sep-245.035-16.5
Nov-244.932-26.8
Dec-244.852-34.8

 

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Gilt futures (U4) have opened higher as UK markets return from the long-weekend, catching up with yesterday’s rally in EGBs.

  • Dovish ECB speakers and some fresh geopolitical angst supported EGBs yesterday, though volumes and liquidity were limited by UK and US holidays.
  • The May BRC shop price index (released overnight) will have also provided support, recording the slowest annual price growth since November 2021 at 0.6% Y/Y (vs 1.0% cons, 0.8% prior).
  • That leaves futures +35 at 97.26, with a breach of the May 23 high at 97.44 needed to allow for a stronger near-term recovery.
  • Gilt yields are -3.5 to -4.5bps, with the curve bull steepening.
  • A reminder that all public appearances by BoE officials have been cancelled until after the General Election on July 4.
  • SONIA futures are +1.0 to +5.0 ticks through the blues, with BoE-dated OIS pricing ~35bps of easing through the remainder of ’24.
  • Today’s domestic calendar includes CBI Distributive Trades data for May.
Meeting DateSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Jun-245.195-0.5
Aug-245.111-8.9
Sep-245.035-16.5
Nov-244.932-26.8
Dec-244.852-34.8