Off Lows, PCE Eyed

Gilts have stabilised, with bears failing to force a test of yesterday’s low in futures.

• That leaves the contract -4 at 95.75 and the bearish technical backdrop intact.
• Initial support & resistance at Wednesday’s low & high, respectively, remain untouched.
• Cash gilt yields are little changed to 2bp higher across the curve.
• SONIA futures are essentially unchanged through the blue, while BoE-dated OIS shows ~30bp of ’24 cuts.
• Firmer-than-expected European CPI data has provided the major fundamental focus thus far, although ranges in GBP rates markets remain tight.
• Spill over from the impending U.S. PCE release has the potential to change that.
• Gilt month-end extensions are not seen as meaningful but may provide some modest background support later in the day.