The Odd One Out this Morning

Gilts trade on the backfoot to start.

• Futures are -50 or so around 97.10, off worst levels of 96.99.
• Cash gilt yields are 3-5bp higher across the curve, with 2s10s and 5s30s sticking to ranges seen through November.
• We haven’t got a definitive explainer for the move given the bid in core/semi-core EGBs and lack of UK headline flow.
• Maybe some are looking to enact cross-market plays given the recent run of higher for longer rhetoric from the BoE’s MPC and this morning’s CPI data out of France and the Netherlands.
• Still, we would expect to have seen something UK specific to drive such divergent moves in gilts and the short end vs. peers.
• A bid in oil will be helping pressure/cap any rallies in bonds, although that has faded from extremes.
• There wasn’t anything in the way of market-meaningful surprises in the DMO’s FQ4 operations update.
• SONIA futures show flat to 8.5bp lower through the blues, with the strip steepening.
• BoE-dated OIS contracts through ’24 MPC meetings are flat to 3.5bp higher.
• The BoE DMP release and comments from MPC hawk Greene are due later today.