Key Resistance Breached In Futures, April Low Tested In 10-Year Yields

Gilt futures pierce the June 21 high (99.23), but the break has been limited, with highs of 99.32 seen on the initial move through. A further extension higher would switch focus to the 1.382 projection of the May 29-Jun 4-10 price swing (99.62).

• The early April low in 10-year yields (3.978%) is also breached at typing.
• 5s outperform in cash trade, with yields 5.0-7.5bp lower across the curve.
• Gilts still look to Tsys for cues at this stage, with little in the way of meaningful UK news flow seen since the open.
• That will likely persist ahead of the impending FOMC decision.
• Tomorrow will see domestic matters come back to the fore, with the latest BoE monetary policy decision due.
• We have characterised the decision as 50/50 for some time due to a number of factors - a lack of communication from the MPC (due to the election and the pre-meeting blackout periods), a changing composition of the MPC (with Lombardelli replacing Broadbent) and some inconclusive data.
• Market pricing is broadly in line with that idea, showing ~56% odds of a 25bp cut.
• Our full preview of the event can be found here.