Stabilising After Corrective Pullback

Gilts recover from yesterday’s lows alongside U.S. Tsys & Bunds.

• This comes as the broader USD trades lower, while U.S. & European equity futures register the highest levels of the week.
• News flow remains limited after yesterday’s weekly jobless claims print countered some of the negativity provided by recent U.S. data.
• Futures +15 at 98.59.
• The latest pullback in the contract is considered corrective, with key support at the 20-day EMA (99.04) untouched.
• First resistance comes in at the Aug 6 high (100.43).
• Yields 2-3bp lower across the curve. 2s10s ~2bp off yesterday’s cycle high.
• SONIA futures -1.5 to +1.5, recovering from Thursday lows alongside gilts.
• BoE-dated OIS shows ~9bp of cuts for Sep & ~43bp of cuts through Dec, little changed on the day.
• Broader risk sentiment will continue to dominate ahead of the weekend, with the UK calendar limited until next week’s labour market (Tuesday) & CPI (Wednesday) data.