Pullback From Highs Extends On U.S. PMIs

The drift away from early London highs has extended on the U.S. PMIs, although sequential cooling in inflation pressures within the U.S data limits the sell off.

• Gilt futures print as low as 98.50, but don’t threaten Thursday’s low.
• Yields are flat to 3bp higher on the day, as the curve moves to bear flattening.
• Today’s general flattening move may be a function of expectations for a slowing of the pace of BoE long end APF sales during Q3 (schedule due to be released at 16:30, we will provide deeper colour in an upcoming preview bullet).
• SONIA futures +0.5 to -2.0, BoE-dated OIS shows ~47bp of ’24 cuts vs. ~50bp earlier today.
• Next week sees a slowdown in scheduled UK risk events, which will likely mean domestic headlines focus on pre-election political posturing.