Off Cheaps, Light Brear Flattening Seen

Gilts operate off session cheaps, with CPI prints from Europe and U.S. Tsy futures flow dominating headline during the early rounds of Wednesday dealing.

• Gilt futures now sit 10 ticks or so higher on the day, sticking within yesterday’s range.
• The major cash benchmarks are 1.0-2.5bp cheaper, with the bear flattening on the German curve applying some spill over pressure.
• The latest DMO consultation with GEMMs and investors pointed to the likelihood of the syndication of a new 20-Year line in the final quarter of calendar ’23, while views re: an I/L syndication in the same quarter were a little more mixed. That, along with the wider details of the release, were broadly in line with expectations.
• Local mortgage and credit data had no impact on the space.
• SONIA futures are -1.0 to +1.0 through the blues, with that zone of the strip seeing marginal twist flattening.