Under Some Cheapening Pressure To Start

Gilts trade lower at the start of a new week, with some light weakness in U.S. Tsys since Friday’s gilt close noted.

• Local weekend headline flow has seen continued fiscal speculation surrounding the upcoming Budget (although the matters discussed aren’t particularly market moving), while strains within the ruling Conservative Party and a soft Rightmove house price index reading have generated soundbites from elsewhere.
• Gilt futures last show -30 or so, 15 ticks off session lows after a brief look below Friday’s base.
• Below early session lows, technical support comes in at the 50-day EMA (94.07), with the short-term bull cycle in the contract remaining in play for now.
• Cash gilt yields are little changed to 1bp higher across the curve.
• SONIA futures are 0.5-4.0bp softer through the blues given the weakness in gilts, steepening. BoE-dated OIS is now little changed across the liquid contracts.
• BoE speak headlines the domestic docket on Monday. We will hear from MPC members Mann & Breeden, with both touching on climate-related matters. We would suggest that the topic of Mann’s address (“climate and monetary policy”) means that her comments are likely to be of more interest for financial markets, although her position at the hawkish end of the BoE spectrum is well-defined.
• Tier one domestic data is due through the week, with labour market readings (Tuesday), the inflation data suite (Wednesday) and retail sales (Friday) all incoming (see more on those releases here).