GILTS: Weaker Alongside Peers, Outperforming Bunds

Weakness in core global FI peers has weighed on gilts today, with hawkish repricing in the front end of the EUR curve noted (ECB-dated OIS still prices 5x 25bp cuts over the next 5 meetings, with risk of 50bp moves seen over the next 3).

• Some typically hawkish comments from ECB’s Nagel this morning, but markets were moving ahead of that.
• No real UK drivers of note.
• Gilt futures traded to fresh session lows of 93.46 recently but stick comfortably within Friday’s range.
• Technical setup for the contract remains bearish.
• Initial support at the November 14 low (92.97), while resistance is located at the 20-day EMA (94.64).
• Yields 2-4bp higher, curve flattens.
• Outperformance vs. Bunds has pulled the 10-Year spread below 210bp, a little over 1.5bp tighter on the day. Spread remains under 10bp off closing cycle highs.
• 5s30s 57.8bp last vs. November multi-month lows at 45.2bp.
• BoE-dated OIS shows 2.5bp of cuts for next month, 19.5bp through February, 26bp through March, 45bp through June and 63bp through December ’25, with the bulk of the hawkish post-Budget repricing still holding.
• Contracts little changed to ~4bp less dovish on the day. Next 25bp cut fully discounted for the March MPC.
• SONIA futures flat to -4.5.
• Comments from BoE’s Greene due after the close today.
• Wednesday’s CPI data headlines this week’s UK calendar (expect our full CPI preview Tuesday).