Little Changed, Downtick In Bunds Caps Any Rally

Gilt futures tight, rallies capped as Bunds edge lower on the previously flagged drivers.

• Gilt futures -3 at 98.29, early 98.29-44 range.
• Technically, gilt futures remain in a bull-mode position, however, last week’s move lower does suggest scope for a deeper retracement.
• A continuation of the latest sell-off would open 97.67, a Fibonacci retracement point.
• On the upside, key resistance has been defined at 100.37, the Mar 13 high. A move through this level would confirm a resumption of the recent bull cycle.
• Gilt yields are little changed lower across the curve.
• SONIA futures and BoE-dated OIS remain little changed on the day.
• Speculation re: further pre-election UK fiscal easing intensified over the weekend.
• Rightmove house price data recorded stronger M/M & Y/Y upticks this month.
• The DMO will hold its quarterly consultation meetings with investors (15:30) and GEMMs (17:00) today in which it will discuss more details regarding FQ1 (Apr-Jun) issuance. We will post more on this later.
• The BoE will sell GBP750mn of medium-term gilts from its APF later today.
• Further out, Wednesday’s UK CPI release and Thursday’s BoE decision provide the domestic highlights of the week.