Off Intraday Highs But Still Outperforming EGB/USTs

Gilts have come off intraday highs but remain over 80 ticks firmer on the day, following the lower than expected UK CPI print for November, continuing to outperform EGB/UST counterparts.

• Gilt futures are currently up 82 ticks at 102.77 (from a high of 103.08), with 103.12 (2.618 proj of the Nov 24 - 29 - 30 price swing) the first resistance.
• The gilt curve bull steepens, with 10Y Gilt yields down -10.5bp at 3.543% and 2Y Gilt yields down -14.9bp at 4.115%.
• Services inflation, watched closely by the BoE, disinflated to 6.3% Y/Y (vs a split consensus of between 6.5/6.6% in our preview, 6.6% prior and 6.9% in the BoE Nov projections). BoE-dated OIS contracts price over 140bps of cuts through 2024.
• The CPI data overshadows the November XpertHR median pay print, which remained steady at 6.0 Y/Y and slightly less deflationary than expected PPI figures.
• There is still a slew of UK data releases due later in the week, the most notable being public sector finances, retail sales and the final estimate of Q3 GDP.