Non-Committal Start To The Week

Gilt futures last print -25, just shy of 97.95.

• The contract is ~10 ticks off the top of its ~40 tick range (98.04), after Friday’s low was unchallenged during the early sell off.
• Weakness in Tsys and some modest pressure in UK STIRS seemed to help when it came to the early move lower in gilts, but the space quickly stabilised.
• Gilt yields are 0.5-2.0bp lower on the day, with the front end now outperforming as the curve steepens a touch.
• SONIA futures are 0.5-4.5bp softer through the blues, while BoE-dated OIS is now essentially unchanged through ’24 MPC contracts.
• Local headline flow has generally centred on the potential for BoE pushback against market pricing of rates cuts at this week’s policy meeting (per the title of the latest BBG survey on the matter, potentially filtering into SONIA), a further increase in expectations re: pre-election income tax cuts and the rifts within the ruling Conservative Party.
• Domestically, medium bucket gilt sales from the BoE are due today. Focus will then turn to tomorrow’s labour market report ahead of Thursday’s BoE decision.