Lower Alongside Peers, 30-Year Syndication Eyed

Gilt futures breach yesterday’s base as they follow global peers lower at the open, while the cash curve sees some light bear flattening.

• Yesterday’s late Tsy weakness and firmer-than-expected Australian CPI data drive the move.
• Futures base at 96.50 before recovering to the 96.60 area.
• Initial support at the April 19 low (96.45) protects the cycle low (96.01), with the bearish technical backdrop remaining intact.
• Gilt yields 3-4bp higher, with 10s back above 4.10%.
• SONIA futures and BoE-dated OIS sit around pre-gilt open levels flagged in our earlier bullet, showing ~50bp of ’24 cuts.
• CBI trends data headlines the UK data calendar today, but that shouldn’t be a market mover.
• Greater focus will fall on the impending syndication of the 30-Year on-the-run gilt (4.375% Jul-54).
• We suggest a minimum transaction size of GBP4.75bln, with the possibility of upsizing the transaction to GBP6.0bln or higher (if there is very strong demand). Our best guess is that books will open at 09:00 London, as they didn’t open at 08:30. See our earlier bullet for further details.