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Off Highs, Curve A Little Flatter, BoE Sales Due Later

GILTS

Gilt futures little changed at 98.56, sticking within Friday’s range. Technicals are bullish, resistance 99.25, support 98.21. Yields, 0.5-2.0bp lower across the curve, flattening seen. Morgan Stanley recommended 10s30s flatteners late Friday.

  • Softer-than-expected German IFO saw session highs, before the rally was pared.
  • BoE-dated OIS little changed, 47.5bp of ’24 cuts priced, 14.5bp through Aug, ~22bp through Sep. SONIA futures +0.5 to -1.5. STIRs off last week’s dovish extremes.
  • This BoE will sell GBP750mn of medium-term gilts from its APF this afternoon, after confirming that it will trim medium- and long-term gilt sales in Q3 (the latter likely provides light support for gilts early today). CBI trends data is also due.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Aug-245.056-14.4
Sep-244.982-21.8
Nov-244.826-37.4
Dec-244.724-47.6
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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