Off Lows On Domestic PMIs

Gilts and SONIA futures move off lows in the wake of the domestic PMI data.

• The survey saw less focus on cost passthrough, but that was due to a slowdown in input cost inflation. There was a continued reduction in increases in services prices as a result, although goods producers saw their highest output prices in a year.
• Those services price snippets and the softer-than-expected services PMI reading drive post-market reaction.
• Gilt futures last -18 at 96.81 (lows of 96.58).
• Cash gilt yields are 1-3bp higher vs. yesterday’s closing levels, still bear flattening on the day.
• SONIA futures are 0.25 to 3.0bp lower on the day.
• Less than 2bp of easing is priced into BoE-dated OIS through the June MPC meeting, with ~34.5bp showing through year end.