Remaining Under Pressure, Curve Steeper

Gilt futures extended the early sell off to print as low as 94.80, with spill over from weakness in U.S. Tsys and EGBs the most obvious drivers in early Friday trade. A light uptick in oil may also be providing some pressure.

• Futures traded as low as 94.80 before moving back to around 94.85, ~130 ticks off yesterday’s multi-week high and -70 or so on the day last.
• Technically, the contract still maintains a short-term bullish tone. Firm support to watch is 92.63, the Nov 1 low, while initial support is seen at 94.03, the 50-day EMA.
• Cash gilt yields run 1.5-7.0bp higher as the curve steepens, with 2s10s and 5s30s ticking away from month-to-date lows.
• SONIA futures last show +1.0 to -8.5 through the blues, twist steepening, but sitting a touch above worst levels of the day.
• BoE-dated OIS shows flat to 5.5bp firmer across the liquid contracts.
• As we have noted on several occasions, domestic data failed to provide any tangible impetus for the space.
• Expect wider market inputs to remain at the fore given the lack of slated UK event risk evident ahead of the weekend.