IRAN: Atomic Energy Head-Enemy Won't Succeed In Restricting Enrichment Programme

Gilts rally in light of the extension of the pullback in oil prices, with futures trading to the highest level seen since Thursday, last +75 at 91.21.

• Bulls need to retake the 20-day EMA (91.73) to start turning the technical tide back in their favour. Note the recovery from cycle lows is allowing an extreme oversold technical condition to unwind. Initial support is 88.80, with bears remaining in technical control at this stage.
• Yields are 6-13bp lower, curve bull steepens.
• 2s are over 30bp off yesterday’s highs, while 10s are 25bp off yesterday’s top. 2s10s threatens a clean break back above 70bp after trading as low as 61.3bp yesterday.
• Elevated correlation with oil prices remains evident, with ongoing focus on the situation in the Middle East.
• Yesterday’s pullback from highs in oil extended after U.S. President Trump signalled that the war could be over “very soon”, albeit not this week. He is also pointed to a potential easing of sanctions as part of a support package to combat surging energy prices.
• BoE-dated OIS has reverted to pricing rate cuts after nearly fully discounting one 25bp rate hike through year-end at one point yesterday (see pre-gilt open STIR bullet for greater detail).
• Little of note on the UK macro calendar today, which will leave focus on geopolitical matters and wider cross-market inputs.
• On the supply front, we remain on the lookout for the syndication of the 4.625% Mar-37 green gilt, which is due to be this week’s business. We pencil in a transaction size of GBP6.0-6.5bln.

• Guidance: 3.375% Dec-35 EU-Bond + 15bps area
• Size: E9bln WNG (MNI expected E7-9bln)
• Maturity: 12 December 2036
• Coupon: Short first
• Settlement: 17 March 2026 (T+5)
• ISIN: EU000A4ERVC2
• Bookrunners: Barclays, DZ BANK, Morgan Stanley (B&D/DM), Societe Generale and UBS
• Timing: Books open, today's business

From market source with MNI colour

• RES 4: 92.47 High Mar 3 and a gap low on the daily chart 
• RES 3: 92.15 High Mar 5 
• RES 2: 91.73 20-day EMA   
• RES 1: 91.35 Intraday high        
• PRICE: 91.13 @ 08:08 GMT Mar 10
• SUP 1: 98.80 High Mar 9 and a gap high on the daily chart     
• SUP 2: 89.43 Low Mar 6
• SUP 3: 88.80 Low Mar 9   
• SUP 4: 88.47 1.500 proj of the Feb 27 - Mar 3 - 4 rice swing     

The sharp rebound in Gilt futures is for now considered corrective and this is allowing an extreme oversold trend condition to unwind. Initial firm resistance to monitor is at the 20-day EMA, at 91.73. A clear break of this average would signal a stronger short-term reversal and possibly even a trend reversal. For bears a resumption of weakness would refocus attention on 88.80, Monday’s low.