May 02, 2024 15:02 GMT
Still Outperforming Peers
GILTS
Cross-market moves continue to guide gilts today, albeit with UK paper outperforming global peers owing to post-FOMC catch up.
- Bulls failed to test initial resistance in futures (96.57), before the contract faded from best levels.
- The pullback failed to get anywhere near yesterday’s closing levels as yesterday’s Fed decision continues to underpin.
- Contract last +67 at 96.32.
- Cash gilt yields last 3.0-7.5bp lower, with 5s outperforming on the curve.
- The 2-/5-/10-Year butterfly trades further away from multi-week highs in the process.
- SONIA futures remain underpinned as their sensitivity to U.S. matters remain elevated. Contracts last 0.25 to 13.0 higher.
- BoE-dated OIS shows 44.5bp of ’24 cuts.
- A reminder that UK local elections could provide the catalyst for a leadership challenge within the ruling Conservative Party if they perform poorly.
- Final UK services PMI data is due tomorrow.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
May-24 | 5.199 | -0.1 |
Jun-24 | 5.111 | -8.9 |
Aug-24 | 4.993 | -20.7 |
Sep-24 | 4.924 | -27.6 |
Nov-24 | 4.827 | -37.3 |
Dec-24 | 4.755 | -44.5 |
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