Little Changed, Budget Speculation Dominates

Headline flow remains light, with wider core global FI markets finding a base in recent trade.

• Gilt futures last -13 at 98.19.
• Early weakness in futures finds a base ahead of 98.00 (98.02-33 range), with bulls initially eying Friday’s high (98.43).
• Bearish trend signals remain evident in the contract and bulls need to overcome key short-term resistance at 98.53 to start turning things more in their favour.
• Gilt yields are little changed across the curve, 10s last printing ~4.10%.
• SONIA futures are flat to -4.0 through the blues, off early lows as the long end stabilises.
• BoE-dated OIS is also off session extremes, last showing 63bp of ’24 cuts, with a 25bp cut fully priced through the end of the June ’24 MPC.
• Weekend comments from Chancellor Hunt pointed to a “responsible” approach to fiscal easing.
• Local press source reports are seemingly biased towards slightly larger tax/national insurance cuts than they were 1 week ago.
• GBP750mn of medium-term gilt sales will come from the BoE later today.
• The local release & speaker calendar is empty on Monday, with focus centred on fiscal speculation ahead of Wednesday’s Budget.