Little Changed, Higher Borrowing Risks Noted, PMIs Due Thurs

Futures little changed at 99.93, higher-than-expected public borrowing figures help limit rallies. Bullish technicals intact, resistance 100.80, support 99.54.

• Yields near unchanged. 2s10s 10bp off ’24 highs, 5s30s 15bp off Aug highs.
• Local press reports continue to point to a difficult (higher tax, lower spending) October budget.
• Risk of additional gilt issuance over the medium-term noted as a result.
• Still 3-year supply saw solid demand, aided by exp. for further BoE rate cuts.
• SONIA futures & BoE-dated OIS flat, ~40bp of cuts priced through year end.
• Flash PMIs due tomorrow, post-election bounce in sentiment to be reassessed. Firmer labour market & inflation components would present risk to pricing of further BoE easing.