Oil Bid & European Data Counter Early Rally

A bid in oil markets and firmer-than-expected ECB inflation expectations data counters the early rally in gilts.

• Futures +8 at 99.56 after a close below the 20-day EMA increased the threat to the underlying bullish technical picture. Bears will look to force a test of the Aug 8 low (99.20) next, while initial resistance remains a last week’s high (100.80).
• Roll activity accounts for most of today’s futures volume ahead of next week’s first notice.
• Yields flat to 1bp higher across the curve.
• SONIA futures flat to -1.5. BoE-dated OIS shows ~39bp of cuts through year end, little changed on the day.
• Comments from BoE Governor Bailey (16:00 text, 20:00 speech) are eyed.
• The BoE has so far been reluctant to commit to follow up rate cuts following its August move.