Off Lows Ahead Of Powell

Gilts stabilise above session lows alongside wider core global FI markets, with macro news flow remaining limited ahead of Fed Chair Powell’s impending address (15:00 London).

• Futures stick within Monday’s range, last -33 at 97.85.
• Our technical analyst notes that the short-term outlook for the contract remains bearish, despite the recent gains. Initial support at the July 4 low (97.32).
• Yields are 0.5-3.5bp higher across the curve, light steepening seen.
• SONIA futures are flat to -3.0, while BoE-dated OIS is little changed, showing ~14.5bp of cuts for August and ~47bp of easing through year end.
• Dovish flows continue dominate in SONIA options, with August cut plays remaining in vogue for a second consecutive week.