Under Light Pressure Following GDP

Firmer-than-expected UK GDP weighs on gilts at the open, futures briefly close yesterday’s opening gap higher (97.84). Cash gilt yields ~2bp higher across the curve.

• Our technical analyst points to a short-term bearish picture despite the recent gains in the contract. Initial support comes in at the July 4 low (97.32).
• Conversely bulls need to break yesterday’s high (98.38) to turn focus higher,
• SONIA futures 0.5-2.5bp lower, below pre-gilt open levels but off early lows.
• While we don’t see today's GDP release as a meaningful market mover, we have noted overall activity data is holding up much better than consensus/BoE exp.
• The domestic economic data calendar is empty for the remainder of the day, leaving focus on the U.S. CPI release.
• June’s CPI data provides the next meaningful domestic release of note, scheduled for Wednesday.
• On the supply front, GBP3.75bn of 4.00% Oct-31 supply is due today.