Lower Tier Data Counters Spill Over EGB Weakness

Any early spill over weakness in gilts is contained, with the impact of the shallowest rise in the BRC shop price since ’21 probably countering pressure from the French CPI data.

• Futures last -10 or so around 96.40 (96.29-43 range).
• The overarching bearish technical backdrop for the contract remains in place.
• Last Wednesday’s breach of support at the Apr 17 low (96.01) confirmed a resumption of the downtrend and maintains the bearish price sequence of lower lows and lower highs.
• Furthermore, moving average studies have recently crossed, highlighting a bear-mode set-up.
• Scope is seen for a move towards 95.00 next.
• Initial firm resistance to watch is the 20-day EMA (97.16).
• Cash gilt yields are flat to 1bp lower across the curve.
• GBP STIRs operate around pre-gilt open levels covered in an earlier bullet.
• Lower tier UK credit and money supply data are due today, along with the GBP4.0bn launch of the new 5-year 4.125% Jul-29 gilt.
• Also note that the BoE will publish its quarterly APF report.