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Ticking Lower To Start

GILTS

Gilts follow Bunds lower, with the early Friday ECB sources piece from the FT the apparent driver.

  • That allows bears to push the contract further away from yesterday’s best levels and back below 96.00, -55 last.
  • Technically, key short-term resistance at 95.79, the Sep 1 high, has been breached and this signals a resumption of the bull cycle that started Aug 17. The break higher establishes a bullish price sequence of higher highs and higher lows and opens 96.66 next, a Fibonacci projection, ahead of 97.00. On the downside, initial firm support is seen at 94.63, the 20-day EMA.
  • Cash benchmarks run 2.5-4.5bp cheraper as the curve bear flattens.
  • SONIA futures are flat to 6.5bp cheaper through the blues, with the reds leading the move lower.
  • BoE-dated OIS tick higher in sympathy with the moves elsehwere, firming by 1.0-3.5bp as the strip steepens.
  • ~21.5bp of tightening shows for this month’s MPC, with terminal policy rate pricing at 5.64%, after showing below 5.60% yesterday.
  • The latest Bank of England/Ipsos Inflation Attitudes Survey provides the highlight on the domestic docket ahead of the weekend.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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