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Lower As OATs Struggle Ahead Of Elections, Month-end Flow & U.S. PCE Eyed

GILTS
Bank Of England (BOE) Market NewsHomepageBond Market NewsBulletMarketsFixed Income Bullets

Gilt futures are lower alongside EGBs.

  • Uncertainty surrounding the French political situation dominates ahead of Sunday’s first round of lower house elections, applying some modest spill over pressure to gilts.
  • Futures last -21 at 97.79, just off session lows of 97.75.
  • Yesterday’s low (97.63) presents initial support, while Wednesday’s high (98.54) presents initial resistance.
  • Cash gilt yields are 0.5-2.5bp higher, with a steepening bias on the curve.
  • BoE-dated OIS shows ~14bp of cuts for the August MPC and ~42bp of cumulative easing through year end, with contracts 0.5-2.5bp firmer on the day through mid ’25 meetings.
  • Focus now moves to U.S. PCE data after French, Spanish & Italian flash HICP data matched wider expectations.
  • Modest revisions higher in the final Q1 GDP readings also did little for markets.
  • Elsewhere, sizeable gilt month-end index duration extension flows (based on projections) could play a part as well.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Aug-245.063-13.7
Sep-245.003-19.7
Nov-244.870-33.1
Dec-244.782-41.8
Feb-254.657-54.3
Mar-254.573-62.7
May-254.459-74.1
Jun-254.368-83.2

Source: MNI - Market News/Bloomberg. 2025 meeting dates are estimated.

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Gilt futures are lower alongside EGBs.

  • Uncertainty surrounding the French political situation dominates ahead of Sunday’s first round of lower house elections, applying some modest spill over pressure to gilts.
  • Futures last -21 at 97.79, just off session lows of 97.75.
  • Yesterday’s low (97.63) presents initial support, while Wednesday’s high (98.54) presents initial resistance.
  • Cash gilt yields are 0.5-2.5bp higher, with a steepening bias on the curve.
  • BoE-dated OIS shows ~14bp of cuts for the August MPC and ~42bp of cumulative easing through year end, with contracts 0.5-2.5bp firmer on the day through mid ’25 meetings.
  • Focus now moves to U.S. PCE data after French, Spanish & Italian flash HICP data matched wider expectations.
  • Modest revisions higher in the final Q1 GDP readings also did little for markets.
  • Elsewhere, sizeable gilt month-end index duration extension flows (based on projections) could play a part as well.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Aug-245.063-13.7
Sep-245.003-19.7
Nov-244.870-33.1
Dec-244.782-41.8
Feb-254.657-54.3
Mar-254.573-62.7
May-254.459-74.1
Jun-254.368-83.2

Source: MNI - Market News/Bloomberg. 2025 meeting dates are estimated.