Weaker To Start

Gilts extend their sell off from Friday’s highs as the pre-weekend geopolitical angst moderates. A reminder that Israel and its allies fended off an Iranian-led drone and missile attack, with some hope for restraint noted given the lack of immediate Israeli retaliation.

• Gilt futures -46 at 97.47 (range 97.36-51).
• Cash gilt yields are ~4bp higher across the curve.
• J.P.Morgan recommend entering 10s/30s gilt steepeners ahead of the upcoming Jul-54 syndication (scheduled for next week).
• SONIA futures are generally a touch below pre-gilt open levels, last flat to -5.0
• Domestically, comments from Chancellor Hunt point to a desire for further fiscal loosening (a known), while reports highlight continued struggles for PM Sunak.
• Labour market data (Tuesday, with a particular focus on wages) and inflation data (Wednesday) provide the focal points of this week’s domestic calendar.
• Breeden starts this week’s deluge of BoE speak later today, although the address will focus on the outlook for payments innovation, so is unlikely to be a market mover.