Light Bull Steepening To Start

Gilt futures firm, paring Friday’s post settlement losses to sit +5 or so. Cash Gilts run 1-3bp richer, bull steepening, as the 2-/10-Year curve edges away from last week’s multi-decade inverted extreme.

• Weakness in equities is lending support as we type.
• Weekend rhetoric from PM Sunak and Chancellor Hunt saw the former push back on the idea of sizable public pay rises, as he warned against the feedthrough into inflation that such moves would have, while the latter noted that consumer watchdogs must use their powers to help bring down prices.
• Elsewhere, the FT ran a story noting that retail investors snap up gilts as yields surge ahead of UK savings rates. This is a topic that the outlet covered previously, after it also flagged a general buy-side pull back/wariness re: Gilt purchases (we touched on those matters here).
• BoE-dated OIS softens a touch on the day, leaving terminal pricing just below the 6.25% mark in policy rate terms.