Light Post-FOMC Pressure

Gilts move back below 98.00 in the wake of the FOMC decision, but still trade the best part of a big figure above pre-U.S. CPI levels, last -15 at 97.86.

• Technically, yesterday’s strong rally in futures resulted in a break of resistance at 97.86 and 98.05. This cancels a recent bearish threat and instead highlights a resumption of the bull cycle that started May 29. A continuation higher would signal scope for a climb towards 98.89, the May 16 high and a key resistance. Initial support lies at 97.12, the 20-day EMA.
• Cash gilt yields are 2.5-3.0bp higher across the curve.
• SONIA futures and BoE-dated OIS operate around levels flagged in the pre-gilt open bullet.
• RICS house price balance data was much softer than expected on the back of higher-for-longer interest rate worry, although the data won’t be a market mover for GBP STIRs & gilts.
• Polling suggested Labour leader Starmer provided a better showing than PM Sunak during last night’s Sky leaders’ debate, while the Labour Party maintains a very wide lead in the polls.
• Tomorrow’s Bank of England/Ipsos Inflation Attitudes Survey provides the next domestic data point of note.