Free Trial

Several Factors Support, BoE's TSC Ongoing

GILTS

Gilt futures have added 62 ticks and last trade at session bests of 97.92.

  • Still, the bearish technical threat remains intact in the contract.
  • Initial technical parameters come in the form of support at the Feb 13 low/bear trigger (96.81) & resistance at the 50-day EMA (98.71).
  • Bulls need to overcome the latter to overturn the overarching technical theme.
  • Cash gilt yields are 5-6bp lower across the curve, with the front end outperforming.
  • Outright yield levels and the cut in China’s 5-Year LPR fixings have dominated when it comes to discussions/reasoning re: this morning’s contained rally in core global FI markets.
  • Decent demand metrics at the latest round of 40-Year gilt supply also plays into the theme, with an extension of the rally seen post-auction.
  • SONIA futures sit +0.25 to +8.5 through the blues, with the late reds and early greens outperforming at the margin.
  • BoE-dated OIS moves to price ~74.5bp of cuts at typing vs. ~68bp at yesterday’s close.
  • Goldman Sachs pushed their call re: the first BoE rate cut back to June from May.
  • They still see a more aggressive rate cut path than the broader market, looking for 5 consecutive 25bp cuts between June and year end, with a terminal rate call of 3.00%.
  • We flagged the attractiveness of received Dec ’24 MPC via Aug ‘24/Dec ’24 spread plays at the back end of last week.
  • A Tsy Select committee hearing with BoE’s Bailey, Broadbent, Greene & Dhingra is ongoing. Broadbent doesn’t rule out policy easing at some point this year.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.