Off Lows

Early ’24 global IG supply dynamics helped apply pressure to gilts in early Wednesday trade.

• A fresh pullback in oil seemed to help the space find support, although crude has bounced from lows in the time since, while gilts hold off of cheaps.
• Futures last show -5 or so around 101.65, just off the high of its 44-tick range.
• The contract has stuck within the boundaries established on Tuesday, with bears failing to test yesterday’s base during the early weakness.
• Gilt yields are flat to 3bp higher across the curve, with the front end coming under the most pressure and 10s little changed on the day.
• SONIA futures are -0.5 to +5.5 through the blues, with the front-end outperforming and the reds coming under the most pressure.
• BoE-dated OIS is flat to 3bp firmer through ’24 contracts, with 142.5bp of cuts now showing through ’24 (off late ’23 extremes, which saw shallow forays beyond pricing 150bp of cuts).
• Lower tier local data (IoD survey and Kantar grocery prices) were bond-supportive at the margin.
• There is nothing of note on the UK docket through the remainder of today, with the initial round of ’24 gilt supply, final services PMI print for Dec and the release of the BoE’s latest DMP survey scheduled for tomorrow.