Off Best Levels But Still Comfortably Firmer

Gilt futures last show +50 at 100.30, around the middle of the contract’s early 63-tick range.

• Cash gilt yields are 4-6bp lower across the curve, with a light bull steepening seen.
• The broader bid witnessed in core global FI markets allowed the space to richen at the open, before bulls failed to force a break of Wednesday’s high in futures. The wider bond bid also found a bit of a limit.
• Geopolitical angst surrounding the U.S & UK led air strikes on Houthi-linked targets in Yemen facilitated at least part of the bid, as well as allowing crude oil futures to push higher.
• The softer-than-expected 3-month/3-month domestic GDP and index of services data also seemed to get more attention than the headline monthly beats after some negative revisions.
• Still, next week’s inflation and labour market data are much more important when it comes to BoE policy matters.
• In terms of local market specifics, the DMO announced the joint bookrunners for the new Jul-54 gilt, due to take place in the w/c 22 January (see earlier bullet for further details).
• The DMO also announced that the Bank of Montreal London Branch will be recognised as a retail GEMM from Monday 15 January.
• SONIA futures run +0.5-8.0bp, with the reds leading the bid.
• BoE-dated OIS is 0.5-5.5bp softer across ’24 meeting contracts, showing ~126.5bp of cuts for ’24.