Slightly Richer In Parallel Shift, Supply & Offshore Inputs Eyed

Gilts firm at the open, but futures pare back from their early highs and stick within the range observed on Tuesday, last dealing +20 or so, while cash trade sees the major benchmarks print circa 3bp richer in what has been a parallel shift.

• SONIA futures run 0.5 to 4bp richer through the reds, while BoE-dated OIS eases in sync, leaving terminal policy rate pricing hovering around the 6.45% mark.
• Local headline flow hasn’t been particularly market moving, with the government continuing to prioritise the fight against inflation over any calls for fiscal easing, while the BoE FSR provided some interesting snippets re: the direction of travel for mortgage payments over the coming years, given the shunt higher in interest rates from historically suppressed levels.
• Subsequent BoE speak on financial stability will filter out through the day. Elsewhere, the DMO will come to market with GBP3.5bln of the 10-year 3.25% Jan-33 line.
• Further afield the latest U.S. CPI release and BoC decision will provide plenty of cross-market feedthrough.