GILTS: Supported Alongside Bundsm, Domestic PMI The Key Focus

Gilt futures are +20 at 98.12, supported by the weaker-than-expected German flash PMI print. 

• First resistance in Gilts lies at 98.93 (Jul 16 high), though bulls will need to top key short-term resistance at 99.23 (Jun 21 high) to strengthen a bullish technical theme.
• Immediate focus in UK markets remains on the July flash PMIs at 0930BST. Price components will be eyed, particularly the extent to which firms are able to pass-on costs to end consumers.
• At 1000BST, the DMO will sell GBP2.25bln of the 30-year 4.375% Jul-54 gilt, following a syndicated launch in January and syndicated tap in April. We expect strong demand but will be watching the tail with interest.
• Overnight, the Brightmine HR wage data showed the median basic pay award in the 3-months to June rise 4.9% Y/Y (unchanged from the previous rolling quarter’s revised figure). 
• Gilt yields are generally little changed/slightly lower across the curve at typing.