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GILTS: Support In Futures Tested

GILTS
CEEMEABulletUKGlobalFixed Income BulletsRegionMarkets

Gilt bears force futures through early session lows 

  • Contract bases at 99.30, just above next support at the Sep 9 low (99.29).
  • Yields now flat to 3bp higher, curve bear steepening.
  • 10-Year yields within a couple of bp of the Sep 9 high (3.943%).
  • Core global FI peers are also off session highs, but gilts continue to underperform vs. Bunds, widening by ~5bp on the day at the 10-Year point.
  • While the UK PMI data was weaker than expected, the readings weren’t as soft as European comparables.
  • Meanwhile, the breakdown of the UK PMIs wasn’t particularly dovish.
  • This allowed the Eurozone PMI-driven rally to unwind as participants refocused on how “gradual” further BoE cuts will be, particularly given the likely short-term inflation trajectory.
  • BoE-dated OIS pares dovish moves, showing ~41bp of cuts through year-end and ~126bp of easing through June ’25, within ~1bp of Friday’s closing levels.
  • SONIA futures flat to +3.0.
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Gilt bears force futures through early session lows 

  • Contract bases at 99.30, just above next support at the Sep 9 low (99.29).
  • Yields now flat to 3bp higher, curve bear steepening.
  • 10-Year yields within a couple of bp of the Sep 9 high (3.943%).
  • Core global FI peers are also off session highs, but gilts continue to underperform vs. Bunds, widening by ~5bp on the day at the 10-Year point.
  • While the UK PMI data was weaker than expected, the readings weren’t as soft as European comparables.
  • Meanwhile, the breakdown of the UK PMIs wasn’t particularly dovish.
  • This allowed the Eurozone PMI-driven rally to unwind as participants refocused on how “gradual” further BoE cuts will be, particularly given the likely short-term inflation trajectory.
  • BoE-dated OIS pares dovish moves, showing ~41bp of cuts through year-end and ~126bp of easing through June ’25, within ~1bp of Friday’s closing levels.
  • SONIA futures flat to +3.0.