Several Factors Support, BoE's TSC Ongoing

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.