Under Some Fresh Pressure On PMIs

Gilt futures travel back towards session lows after a firmer-than-expected, expansionary services PMI print knocked the contract away from best levels. It last prints -5 at 96.64, 20 ticks off the base of a 52-tick session range.

• The manufacturing PMI release wasn’t as soft as expected, but remained in contractionary territory, while the composite reading moved back into the expansionary zone, just.
• Cash gilt yields are 0.5-2.0bp higher on the day, as the curve bear flattens.
• There had been a bit of a relief rally in the space, alongside Bunds, ahead of the data.
• SONIA futures now show +0.25 to -5.5, twist steepening, with the reds and greens seeing the most weakness.
• As flagged earlier, call condor demand has once again been seen in SONIA options this morning, via the SFIM4 94.70/94.80/94.90/95.00 structure.