EQUITY TECHS: E-MINI S&P: (H6) Still Looking For Gains

Gilts have ticked higher alongside Treasuries, with a block buyer in U.S. TU futures helping generate the latest rally amid limited macro news flow.

• Futures register fresh session highs at 91.29 as a result. Bulls have forced the contract above initial resistance at 91.16 and a close above would switch focus to the next resistance at the November 27 high (91.93).
• Yields 3-4bp lower, curve marginally flatter.
• 2s, 30s and 50s have unwound yesterday’s sell off, while 5s and 10s are 2-3bp above Monday’s closing levels.
• TSC comments from BoE Deputy Governor Ramsden lean a little dovish (see recent bullet for greater details), although that hasn’t generated much of a market reaction in the short end.
• SONIA futures flat to +4.0.
• BoE-dated OIS pricing ~22bp of easing for this month, 29bp through February and 35bp through March, liquid contracts 0.5-2.5bp more dovish on the day.

Ramsden's comments on restrictiveness may be pressuring GBP here - as noted above he says he sees neutral as close to 3% and judges that the "policy stance continues to be restrictive."

• GBPUSD weakness presses the pair to new daily lows and trade within range of initial support into 1.3267. A break below would open the 20-day EMA intersecting at 1.3235.
• Concurrently, EURGBP trades a new daily high of 0.8743 but the strength is generally short-lived - mirroring the lack of any follow-through move in SONIA markets.

• Mann: "I continue to believe that the MaPS assessment of a neutral rate of around 3.25-3.5% for Bank Rate is about right. This is higher than the neutral rate embodied in the forecast – where long-term R* was estimated to have to fallen to around 0-1% with a most likely estimate of ¼ percent in real terms. Together with the inflation target this implies a nominal neutral rate of 2¼ percent."
• Some dovish comments in her Report but the above is in line with her previous view.