Off Lows, Yields A Little Softer On Day

Gilt futures consolidate in a tight 29-tick range in early Monday trade.

• The contract last shows at ~97.40, essentially flat on the day, after dealing either side of late Friday levels.
• Bears do not force a test of Friday’s low in futures (97.05).
• That leaves well-defined technical parameters in play for the contract and the bearish threat intact.
• Meaningful support comes in at the Feb 13 low/bear trigger (96.81).
• Cash gilt yields are 1.0-2.5bp lower, light bull steepening seen.
• SONIA futures are +0.5 to -1.0, comfortably off early session lows.
• Late Friday comments from BoE’s Pill haven’t really moved the needle (pointing to no need to move rates for at least a few months, while noting rates would still be restrictive after a cut).
• The same holds true for the latest speculation re: the energy price cap, political matters and Rightmove house price data.
• The holiday-related closure of U.S. markets and lack of tier 1 event risk may leave many sidelined today.
• Medium-term APF sales from the BoE are due this afternoon and headline today’s limited UK docket.
• Further out, public finance data and flash PMIs are due this week, as is BoE speak from Bailey, Dhingra & Greene.