Sell Off Extends

Gilts remain under pressure given the upside risks to core German CPI readings presented via the regional level data.

• Generally in line to firmer than expected CPI readings out of Spain & France also factor in.
• Futures move below initial support levels to print as low as 96.83.
• Next support comes in at the Dec 5 low (96.67)
• Cash gilt yields are 5.5-8.0bp higher, bear flattening.
• SONIA futures are +0.25 to -9.5, with recent lows breached in many contracts.
• BoE-dated OIS moves to price ~52bp of cuts for ’24, the shallowest level witnessed in the current pricing cycle.
• Local news flow has had little impact, with continued fiscal speculation, digestion of Wednesday comments from MPC hawk Mann and lower tier data all seen.
• More recently we got confirmation that the UK Treasury has appointed Clare Lombardelli to replace outgoing BoE Deputy Governor Ben Broadbent as of July 1^st. Lombardelli was known to be in the running for the vacancy. She is currently the OECD's Chief Economist and G20 Finance Deputy.
• The local calendar is thin for the remainder of the day, leaving focus on German national CPI & U.S. PCE data.