Off Lows, Tight Ranges

Gilts off lows. Firmer-than-expected UK GDP provided early pressure, before solid demand at the GBP3.75bn 4.00% Oct-31 gilt auction provided light support.

• Futures stick to a tight 17-tick range, last -4 at 97.93.
• Our technical analyst points to a short-term bearish picture despite the recent gains in the contract. Initial support at the July 4 low (97.32).
• Yields 0.5-1.5bp higher.
• While we don’t see today's GDP release as a meaningful market mover, we have noted overall activity data is holding up much better than consensus/BoE exp.
• SONIA futures a little lower as result, -1.0 to -2.5.
• Meanwhile BoE dated OIS now shows ~11.5bp of cuts for August vs. ~12.5bp late yesterday. ~45.5bp of easing priced through year end.
• The UK calendar is empty for the rest of the day, leaving focus on U.S. CPI.
• Further out, June’s CPI data is the next meaningful UK release, due Wednesday.

Source: MNI - Market News/Bloomberg. 2025 meeting dates are estimated.