Light Pressure Seen, Futures Look Below Wednesday Low, Issuance Matters Draw Most Attention

Gilt futures initially show below yesterday’s low. Bunds were already ticking lower ahead of the gilt open, but a lower start for UK futures applied some spill over pressure to wider core global FI markets.

• BBG source reports flagging “unprecedented support” for Chinese builders is applying some light pressure to bonds.
• Domestically, focus on higher-than-expected gilt issuance over the coming years continues to do the rounds post-Autumn Statement.
• Gilt futures are -15 or so, ~10 ticks off opening lows, with well-defined technical parameters flagged in recent days remaining untouched, leaving bulls in short-term control.
• Cash gilt yields are ~2bp higher across the curve in what has been a parallel shift.
• The light cheapening in gilts biases SONIA futures lower, leaving contracts flat to -3.5 through the blues.
• BoE-dated OIS sits little changed to 1bp firmer on the day.
• As flagged earlier, flash PMI data headlines the domestic docket today.