Long End Pares U.S.-Data Driven Sell Off As Equities Falter

Gilt futures have reversed all of yesterday’s U.S. initial jobless claims-inspired sell off, with core global FI markets seeing a modest rally into the weekend.

• Contract last +27 at 99.71, initial resistance not seen until the August 6 high (100.43), with the bullish technical backdrop remaining in play.
• Some equity weakness seen alongside the move higher in gilts, with e-minis and Euro Stoxx 50 futures pulling back from fresh weekly highs to trade at session lows.
• Yields 2.5-4.5bp lower on the day, with a light flattening bias, countering a very modest portion of the steepening seen in recent sessions.
• Only 2- & 5-Year yields remain above levels seen ahead of yesterday’s U.S. data.
• SONIA futures -0.5 to +3.5.
• BoE-dated OIS shows 9bp of cuts for September and ~44bp of cumulative easing through the December MPC.
• Next week’s labour market and CPI data is set to reinject domestic impulses after this week’s sentiment-driven moves.