Holding Firmer Post-Retail Sales

Gilts hold firmer after the softer-than-expected domestic retail sales data, building further on yesterday’s recovery.

• Futures last show +30 at 99.01, 10 ticks off the peak of their 29-tick session range.
• Initial resistance comes in at the Jan 16 base/gap target (99.71). Bulls need to force a break there to start turning the tide more in their favour, with a bearish technical cycle still in play.
• Cash gilt yields are 2.5-5.5bp lower across the curve, with a light bull steepening bias.
• 10s tick further away from round number resistance at 4.00%, after Wednesday’s sell off ran out of steam just ahead of the level. Last print is 3.89%.
• SONIA futures are flat to 7.5bp firmer, with the reds outperforming.
• BoE-dated OIS shows ~117bp of cuts through ’24 post-data. A reminder that yesterday saw that measure trade within a couple of bp of 100bp of cuts, before closing at ~109bp of cuts.
• The local docket is essentially empty ahead of the weekend (save some bill issuance), which will leave focus on wider macro matters/market moves.