Stabilising, Bearish Backdrop Remains

A tight start for gilts, stabilising as Bund yields move away from 2.60%.

• Futures move away from yesterday’s low as bulls look to force an extension after reclaiming 96.00.
• The bearish technical backdrop remains intact, with yesterday’s base (95.78) providing initial support. Meaningful resistance is some distance away.
• Cash gilt yields are little changed to 1.5bp lower across the curve.
• 10s are ~3bp off yesterday’s early ’24 high, last 4.325%.
• SONIA futures move back towards unchanged levels across the strip, with the modest early downtick fading.
• Domestic news flow includes continued signs of a loosening labour market, with Reed recruitment data revealing a general drop in vacancies. The report also points to reduced flexibility in locations/scheduling, which could provide some challenges as policymakers try to get more people back into the workforce.
• Today’s UK calendar is very thin, which will leave focus on broader headline flow and cross-market impulses.