CZK: CPI Shows Processed Food Subcategory a Key Downside Inflation Driver

Gilts rally on the combination of broader risk-off price action and speculation surrounding domestic fiscal matters.

• Futures as high as 93.81, but initial resistance at 93.96 is untested. The bullish technical theme remains intact in the contract.
• Yields 3-4bp lower, curve a touch flatter.
• Bulls still unable to force a convincing break below 4.40% in 10-year yields at this stage.
• October yield lows untested across the curve.
• Chancellor Reeves will speak at 08:10 London, ahead of an address in the Commons at 11:30.
• She is expected to lay out her objectives for the upcoming Budget (26 Nov) and she is likely to note that the Budget will reflect Labour values, protect working people, focus on "fairness and opportunity" and to protect the NHS. She is also expected to reiterate her commitment to the fiscal rules.
• She is not expected to commit to any specific tax or spending increases and she is extremely unlikely to repeat the manifesto commitment to not increase income tax, VAT or national insurance.
• See recent bullets for more on the likely wording of the address and latest media reports around the matter.
• On the supply front the DMO will sell GBP5.0bln of the 4.00% May-29 gilt this morning.
• Elsewhere, BoE’s Breeden will speak at Santander’s International Banking Conference. Note that the BoE is in its pre-meeting quiet period, so don’t expect her to comment on monetary policy. She will focus on financial stability and there will not be a text release.

Gilt calls, a tight 93.59/93.61.

Some attention on the EU Cash Open following the fall in Equity futures led by Tech. US Nasdaq futures is still the worst performer among the Major Indices, down 1.2%.

• Calls: Estox 50: -0.97%, Dax: -1.08%, CAC: -1.09%, FTSE -0.23%, SMI -0.26%.