Under Modest Pressure

Gilt futures extend the move away from yesterday’s best levels, last showing -35 at 98.35, registering fresh session lows in recent trade. The contract operates in a fairly contained 42-tick range. Well-established technical parameters remain untouched after yesterday’s rally eased the bearish threat.

• Cash gilt yields are 3-4bp higher across the curve.
• Cross-market feedthrough from comments made by ECB Executive Board member Schnabel were noted early on today.
• Decent demand at the relatively well-received round of 3.75% Mar-27 gilt supply did little to counter the bid, with focus on wider IG supply and a downtick in broader core global FI markets being felt.
• Comments from BoE MPC member Breeden had little impact, stressing a focus on wages, demand and inflation, while pointing to less inflationary worry at present and a few months of “key data” ahead. Breeden's speech concluded with "what does this mean for policy?" - and effectively shifted to focusing on how long rates need to be held at current levels, while playing down the odds of a revisit to near 0% rates.
• SONIA futures show flat to 4.5bp lower across the strip, with a modest steepening bias.
• BoE-dated OIS shows ~86bp of cuts through ’24.
• The local docket is limited for the remainder of the day.