Little Changed After Early Look Lower

Gilt futures initially edge lower before recovering, as the impulses from wider core global FI markets drive the space in early Monday trade.

• Lows of 97.83 were printed, before a recovery to the 97.95 area, with the contract now a little above late Friday levels.
• The contract has pulled back from its recent highs. A break of 98.76, the May 16 high, would confirm a resumption of the current bull cycle. Initial firm support has been defined at 97.23, the May 14 low.
• Cash gilt yields are essentially unchanged across the curve.
• SONIA futures are generally a little above pre-gilt open levels, last flat to -2.0.
• The death of the Iranian President hasn’t provided a tangible increase in the geopolitical risk premium.
• Meanwhile, weekend UK headline flow was confined to an uptick in the Rightmove house price index and news that a group of Conservative Party backbenchers has demanded a review of the BoE’s independence. Neither of those matters should be market moving.
• Outgoing BoE Deputy Governor Broadbent will deliver a ‘workshop’ on “New evidence on the Monetary Transmission Mechanism work” this morning, headlines could start to filter out from 10:00 London.
• Elsewhere, the DMO will hold its quarterly consultation with investors/GEMM and the BoE will conduct GBP750mn of medium term APF gilt sales.