Shy Of Best Levels, Futures Little Changed

Gilt futures have ticked away from best levels of the day after bulls failed to force a test of Friday’s best levels. Monday trade in the contract has generally been confined to the range established during the final session of last week, save a brief and shallow look below Friday’s lows.

• Futures last -5 or so, ~25 ticks shy of best levels and ~40 ticks off lows.
• Initial technical parameters (support at the 50-day EMA of 94.07 and resistance at the Nov 9 high of 96.14) remain some distance from prevailing levels, with the short-term bullish cycle remaining in play for now.
• Cash gilts yields are 0.5bp higher to 1bp lower across the curve, with a light twist flattening seen.
• Modest U.S. Tsy swings have seemed to be at the fore when it comes to market moves over the last couple of hours.
• The cabinet reshuffle that we have covered elsewhere continues to get the most domestic airtime.
• Speculation surrounding the potential for pre-election fiscal easing has been getting some airtime, although a relatively tight approach is still expected in next week’s Budget (largely owing to inflationary worry and a need for ‘sound finances’ after last year’s mini-Budget fiasco).
• SONIA futures now show flat to -2.5bp through the blues.
• BoE-dated OIS is essentially unchanged on the day.
• We didn’t get anything in the way of meaningful monetary policy headlines on the wires re: MPC member Breeden’s address, with comments from hawkish MPC member Mann and short maturity bucket gilt sales from the BoE due later today.