Lower, Futures Move Closer To Trendline Support

Gilts are softer alongside global peers. The firmer-than-expected Canadian & Australian CPI data has generated plenty of discussion when it comes to the “bumpy” path for the moderation in inflation, with broader focus on tomorrow U.S. PCE reading.

• Futures have broken yesterday’s low to print 97.67. Next support is seen at the trendline drawn off the May 29 low (97.40).
• The break of the 20-day EMA provides greater risk to the bullish technical backdrop, although the pullback is deemed corrective at this stage.
• Yields are 2-3bp higher across the curve.
• SONIA futures are under modest pressure alongside gilts, last -0.5 to -2.5.
• BoE-dated OIS shows ~13bp of cuts through the August MPC and ~41.5bp through year end, little changed vs. pre-gilt open levels.
• The BoE FSR is due today, but that shouldn’t be a market mover.