Yields A Touch Higher, OFGEM Price Cap Cut Not Quite As Deep As Expected

Bund and TY futures sit in line to a little below levels seen at yesterday’s gilt close.

• That helps apply some modest pressure to gilt futures early today, with the contract -35 at 97.26 (97.22-48 range).
• The contract remains comfortably within the recent range and bears have not forced a challenge of YtD lows in recent days.
• Cash Gilt yields are 1-2bp higher, with light bear flattening on the curve.
• SONIA futures are flat to -8.5, with the late reds and early greens under the most pressure.
• BoE-dated OIS shows ~60bp of cuts through ’24, moving back towards the shallowest level of cuts priced for ’24.
• Domestically, OFGEM announced a 12.3% move lower in the Q2 energy price cap, a slightly shallower fall than the benchmark exp. of circa -14%.
• That means that the household reprieve, while still notable, will not be quite as meaningful as many had hoped and may be applying some modest pressure to gilts & STIRs, even though it shouldn’t meaningfully impact wider policy settings.
• GfK consumer confidence saw a downtick overnight (-21 from -18).
• The survey provider told MNI that there are still headwinds holding back the UK consumer but the outlook for personal finances over the coming year remains a relative positive.
• The domestic docket is virtually non-existent today.