EU CONSUMER CYCLICALS: El Corte Inglés: 8Y FV

Few Block trades Buyers in OAT in the past 15 minutes.

• OATU5  7.92k at 123.88.
• OATU5  2.38k at 123.97.
• OATU5   960 at 123.96.

Gilts hold lower given  cues from global peers and with crude oil off yesterday’s lows, although solid demand at the latest 5-Year auction has provided some support in recent trade.

• Futures stick within yesterday’s range, trading as low as 92.37 before recovering to ~92.50.
• Bullish technical conditions remain intact in the contract, initial support and resistance located at yesterday’s low (92.23) & the 50.0% retracement of the Jun 13-16 down leg (92.95), respectively.
• Yields 1-3bp higher, curve steeper.
• 2s10s and 5s30s stick within multi-week ranges, stabilising back above 60bp and 120bp, respectively.
• BoE-dated OIS is little changed on the day, showing ~48bp of cuts through year-end, with the next 25bp step almost fully discounted through the end of the September MPC (~24.5bp of easing showing through that horizon).
• SONIA futures flat to -3.0.
• Expect global cues to dominate for the remainder of the day, with ongoing focus on the next stages of the Israel-Iran conflict.
• Locally, CPI data will cross on Wednesday, ahead of the BoE’s Thursday decision.
• We see downside risks to the headline and services CPI reading (our full preview is available here).
• Still, the data shouldn’t have too much impact on the BoE decision, with no change expected by both the sell-side and markets, but a low print could impact the vote split.