Weakness Extends On U.S. Data

Weakness triggered by the U.S. retail sales and weekly jobless claims data sees gilt futures comfortably close yesterday’s opening gap higher, with futures back below 100.00.

• Lows of 99.89 seen so far.
• Initial support at the 20-day EMA (99.40) remains untested, leaving the bullish technical backdrop intact, at least for now
• Yields 6.5-8.5bp higher across the curve, with the 5- to 10-Year zone under the most pressure.
• Long end gilts widen further vs. EGBs following the U.S. data, extending this morning’s move.
• SONIA futures now little changed to 10.5bp lower on the day.
• BoE-dated OIS show ~7bp of cuts for next month’s MPC and ~44bp of easing through year end vs. ~8bp and ~47bp early today.