OIL: EIA Weekly US Petroleum Summary - Week to Apr 10
- w/w change week ending Apr 10 -------------------------------------------------------------------...
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US TSY OPTIONS: Large May'26 5Y Ratio Call Spread, 10Y Vol Buyer
- over 20,000 FVK6 110.25/110.75 3x2 call spds ref 108-24.25 to -24.25
- +5,000 TYJ6 112 straddles, 58
- +7,100 TYJ6 115.5 calls, 2 ref 112-27
GILTS: Supported By Energy Pullback
Gilts outperform Tsy & Bund peers today, with UK paper continuing to exhibit heightened sensitivity to energy price swings.
- Futures +100 at 89.48, but still below Thursday’s top (89.70). First resistance of note is located at the 20-day EMA (90.98), with bears remaining in technical control at this stage.
- Yields 9-10bp lower across the curve.
- 10-Year spread to Bunds ~4.5bp narrower on the day, threatening a break back below 180bp after Friday saw the highest close since November.
- Dovish moves in the short end accompany the rally in gilts, further aided by apparent willingness of the UK government to provide fiscal support to combat energy price rises, if it is required.
- SONIA futures flat to +12.0. Moves below the March 25 ’25 low (96.005) in SFIZ6 remain limited and short-lived at this stage.
- BoE-dated OIS 0.5-11.5bp more dovish vs. Friday’s closing levels. ~14bp of tightening priced through year-end, with only 2.5bp of cuts priced through April.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Mar-26 | 3.729 | -0.0 |
Apr-26 | 3.703 | -2.6 |
Jun-26 | 3.750 | +2.0 |
Jul-26 | 3.794 | +6.5 |
Sep-26 | 3.840 | +11.0 |
Nov-26 | 3.866 | +13.6 |
Dec-26 | 3.870 | +14.1 |
CANADA DATA: Inflation Breadth Recedes In February
In terms of inflation breadth, there was some notable disinflationary progress across the CPI basket in February. MNI estimates that 54% of CPI items rose faster than 2% Y/Y, down from January's 60%; the proportion up 3+% fell to 43% from 46%. Recent increases looked largely related to base effects with the GST/HST holiday in Dec 2024- mid Feb 2025 pushing up prices across portions of the basket, but that has started to reverse.
- As suggested by our look through individual categories, goods price inflation breadth has abated, with 53% of goods items rising 2+% (60% prior) and 44% seeing 3+% inflation (47% prior), both 3-month lows coinciding with the tax holiday.
- And even more impressively, services breadth is pulling back noticeably: at 57%, the share of services items seeing 2+% inflation is the lowest it's been in 12 months; for 3+%, the proportion is 39%, the lowest in 14 months.
