Still Outperforming Peers

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.