Softer Start

Gilt futures tick away from yesterday’s late high with core global FI markets also a touch below levels seen around that time. That leaves the contract -24 at 98.46, just above the base of its early 29-tick range.

• Yesterday’s bounce helped ease the immediate bearish technical threat. Initial parameters at 99.29/97.57 remain untouched.
• Cash gilt yields run 2.5-3.5bp higher on the day, with the front end of the curve leading the early move.
• SONIA futures are flat to -4.5 through the blues, with the modest uptick seen pre-gilt open more than reversed alongside the downtick in bonds.
• BoE-dated OIS shows ~85bp of cuts through ’24.
• Late Tuesday we heard that lawmakers have called on the Bank of England to work with the Treasury in order to factor in the scale of losses from quantitative tightening into its decision making on the pace and scales of asset sales.
• We also saw the NIESR suggest that the UK may have slipped into a technical recession at the end of ’23 (not a new idea).
• Earlier today Halifax house price data registered a fourth consecutive M/M rise (+1.3% M/M & +2.5% Y/Y).
• BoE’s Breeden will provide a keynote speech this morning (08:40 London), which provides the highlight of the domestic docket.
• The market will also have to digest GBP4bln of 3.75% Mar-27 gilt supply.