Off Highs, Greene Speech NEars

Gilt futures hold to a narrow 25-tick range thus far, last showing -5 at 98.53.

• Technically, the contract traded higher Wednesday, confirming the end to the recent pause in the bull cycle that appeared to be a bull flag formation. The breach of resistance at the May 10 high (98.29), confirms the flag and highlights a resumption of the recovery that started Apr 25. This signal scope for a climb towards 99.19, a Fibonacci retracement. Initial firm support has been defined at the May 14 low (97.23).
• Cash gilt yields are little changed across the curve, operating within 1bp of yesterday’s closing levels.
• SONIA futures are flat to 1.0bp softer on the day, with the early uptick unwound.
• BoE-dated OIS drifts back to pricing less than 60bp of cuts through year end, with June meeting pricing showing a little over 50/50 odds of a cut come the end of the MPC’s net meeting.
• Moves in wider core global FI have dominated thus far, with a lack of UK-specific headline flow seen.
• Participants await comments from BoE MPC member Greene (12:00 London).
• We see the event as the most important round of this week’s BoE communique, with Greene being one of the more hawkish voices on the MPC.