Yesterday’s High In Futures Holds

Gilts extended higher on the back of the latest round of French political uncertainty.

• This came after a marginally softer-than-expected round of domestic labour market data provided support for gilts & SONIA markets.
• Gilts topped out at 96.69, just ahead of initial resistance at yesterday’s high (96.70), before backing off to 96.57 last.
• Cash gilt yields are 2-4bp lower, with the curve bull steepening.
• 2s10s has hit fresh ’24 steeps (albeit aided by prior benchmark rolls), while 5s30s sticks comfortably within its recent range.
• SONIA futures are flat to +5.5, a little off session highs.
• BoE-dated OIS shows ~34bp of cuts through year end vs. 31bp yesterday, with a 25bp step once again fully discounted through the Nov MPC.
• The syndication of the new 4.25% Jul-34 gilt saw books close above GBP100bn, with the spread set at the tight end of the guidance range.