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Holding Most Of NFP-Driven Rally

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U.S. matters continue to drive GBP FI markets, with gilt futures above 97.00 after taking out initial resistance at the 20-day EMA (96.85) in the wake of the U.S. labour market data.

  • The rally also managed to breach the April 22 high (97.28), peaking at 97.43 before fading back towards 97.10.
  • The short-term technical picture is turning a little more bullish and a break above the 50-DMA (97.74) would provide further short-term momentum for bulls.
  • Gilt yields are 4-9bp lower with the front end of the curve leading the rally. 2s10s little changed, while 5s30s remain comfortably within the range observed in April.
  • The BoE decision headlines next week’s UK calendar. Our full preview of that event will be published on Tuesday.
  • Briefly, with no change in policy expected, 3 focus points are set to dominate:
  • 1) Will the BoE introduce language on downside risks to inflation/provide a stronger signal an upcoming cut?
  • 2) How will the economic forecasts change?
  • 3) Will there be any changes to the vote. The most likely move seems to be Ramsden switching to voting for a cut to make it 7-2 overall.
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U.S. matters continue to drive GBP FI markets, with gilt futures above 97.00 after taking out initial resistance at the 20-day EMA (96.85) in the wake of the U.S. labour market data.

  • The rally also managed to breach the April 22 high (97.28), peaking at 97.43 before fading back towards 97.10.
  • The short-term technical picture is turning a little more bullish and a break above the 50-DMA (97.74) would provide further short-term momentum for bulls.
  • Gilt yields are 4-9bp lower with the front end of the curve leading the rally. 2s10s little changed, while 5s30s remain comfortably within the range observed in April.
  • The BoE decision headlines next week’s UK calendar. Our full preview of that event will be published on Tuesday.
  • Briefly, with no change in policy expected, 3 focus points are set to dominate:
  • 1) Will the BoE introduce language on downside risks to inflation/provide a stronger signal an upcoming cut?
  • 2) How will the economic forecasts change?
  • 3) Will there be any changes to the vote. The most likely move seems to be Ramsden switching to voting for a cut to make it 7-2 overall.