GILTS: Under Light Pressure Following Crude & Equity Recovery

Gilts weaker, low in futures 100.87.

• A recovery from yesterday’s lows in crude oil and equities has weighed.
• Technicals remain bullish, initial support at 100.64, while resistance is seen at yesterday’s peak (100.41).
• Yields 1.5-3.0bp higher, curve bear flattens.
• Solid cover at this morning’s tender operation for GBP2.0bln of the 0.125% Jan-26 gilt, although the price tail wasn’t particularly tight.
• SONIA futures flat to -6.5.
• BoE-dated OIS shows ~46.5bp of cuts through year-end and ~131bp through June ’25 vs. ~48.5bp and ~135bp late yesterday.
• No market reaction to Goldman’s BoE call change given the bearish inputs mentioned above. They now look for sequential cuts to 3.00% come Q325 vs. quarterly cuts to the same terminal rate come Q326 previously.
• Spill over from the ECB decision (25bp cut unanimously expected, focus on accompanying rhetoric) and U.S. data (PPI & weekly jobless claims) is set to dominate today.