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Modest Bear Flattening Following CPI, Supply & King’s Speech Due

GILTS

Gilts lower in the wake of the firmer-than-expected UK CPI data and modest hawkish repricing in GBP STIRs.

  • 2s lead the move, with yields 2.5-4.5bp higher as the curve bear flattens.
  • Gilt futures -3 at 98.49, back from yesterday’s late highs.
  • The bullish technical theme remains in play, with a noisy CPI release doing little to alter that picture at this stage.
  • Initial resistance at yesterday’s high (98.79), which protects the June 25 high (98.92).
  • Initial support not seen until the July 11 low (97.63).
  • A reminder that the King’s Speech will be delivered late this morning (we wrote more on that here).
  • This morning will also see the DMO sell GBP4bn of the 4.125% Jul-29 gilt.
  • Further out, the latest UK labour market report is due tomorrow.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Aug-245.125-7.5
Sep-245.024-17.6
Nov-244.853-34.7
Dec-244.742-45.8
Feb-254.581-61.9
Mar-254.469-73.1
May-254.324-87.6
Jun-254.225-97.5

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

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Gilts lower in the wake of the firmer-than-expected UK CPI data and modest hawkish repricing in GBP STIRs.

  • 2s lead the move, with yields 2.5-4.5bp higher as the curve bear flattens.
  • Gilt futures -3 at 98.49, back from yesterday’s late highs.
  • The bullish technical theme remains in play, with a noisy CPI release doing little to alter that picture at this stage.
  • Initial resistance at yesterday’s high (98.79), which protects the June 25 high (98.92).
  • Initial support not seen until the July 11 low (97.63).
  • A reminder that the King’s Speech will be delivered late this morning (we wrote more on that here).
  • This morning will also see the DMO sell GBP4bn of the 4.125% Jul-29 gilt.
  • Further out, the latest UK labour market report is due tomorrow.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Aug-245.125-7.5
Sep-245.024-17.6
Nov-244.853-34.7
Dec-244.742-45.8
Feb-254.581-61.9
Mar-254.469-73.1
May-254.324-87.6
Jun-254.225-97.5

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