GILTS: Tight Range, Slightly Underperforming Bunds

Gilt futures have traded comfortably within yesterday’s range, though lightly underperform Bunds.

• The DMO’s consultation with GEMMs and investors on its FQ3 operations generally aligned with our expectations, though we had thought there might have been a bit more support for the 0.875% Jul-33 green gilt.
• Gilt futures are +16 at 99.85, with Bunds +23 at 134.38. The 10-year Gilt/Bund spread has thus widened just over 1bp to 169bps.
• The technical trend condition in Gilt futures remains bullish, with first resistance at 100.80 (Aug 14 high) before the bull trigger at 101.46 (Aug 5 high).
• Gilt yields are generally little changed across the curve.
• SONIA futures are flat to 2.0 ticks through the blues, while BoE-dated OIS price 39bps of easing through the remainder of this year.
• Domestic focus remains on Thursday’s August flash PMI and Governor Bailey’s appearance at Jackson Hole on Friday.