GILTS: Futures Hit Lowest Level Of The Week
Aug-08 15:02
Gilt futures have traded to fresh weekly lows alongside the weakness in wider core global FI markets identified earlier.
- The contract has based at 91.89, at least for now, with bears looking to force a close below the now broken 20-day EMA (92.11).
- A weekly close below would counter some of the recent bullish momentum and increase focus on the August 1 low (91.44), which protects the July 18 low & bear trigger (91.08).
- Yields are 2.0-6.5bp higher, with the curve bear steepening. 4.60% has capped the move in 10s for now, while 2s are back below 3.90% after a brief move above. Multi-week ranges intact across the curve.
- SONIA markets continue to point towards two further BoE cuts in the current cycle, with the next 25bp step not fully discounted until the end of the February meeting.
- Note that 50bp of further cuts is close to the BoE's updated macroeconomic model's mid-point of neutral.
- We have seen a couple of the more dovish sell-side BoE views tweaked, although most analysts continue to look for a November cut.
- The monthly labour market report and economic activity data highlight next week’s UK calendar.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Cut-Adjusted SONIA Rate (bp) |
Sep-25 | 3.966 | -0.1 |
Nov-25 | 3.860 | -10.7 |
Dec-25 | 3.801 | -16.6 |
Feb-26 | 3.705 | -26.2 |
Mar-26 | 3.663 | -30.4 |
Apr-26 | 3.585 | -38.2 |
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GILTS: Flatter, Paring Most Of Yesterday's Curve Steepening
Jul-09 14:55
The bid in U.S. Tsys, weakness in crude and move away from highs in e-minis have provided support for gilts, with futures trading to fresh session highs of 91.92, but ultimately remaining within the confines of yesterday’s range.
- Bulls will want to break yesterday’s high (91.98) before attempting to close yesterday’s opening gap lower.
- Yields 0.5-4bp lower, curve flatter.
- BoE Governor Bailey’s reiteration re: recent curve steepening factoring into the Bank’s QT adjustment decision in September underpinned an early flattening curve bias, with major spreads paring most of yesterday’s bear steepening.
- Still, a lack of fiscal headroom, coupled with tepid economic growth and downside risks to productivity continue to promote heighted odds of tax increases as soon as the Autumn, while underscoring the fiscal fragility narrative.
- GBP STIR pricing slightly more dovish on the day given action further out the curve.
- SONIA futures 0.5-2.0 firmer.
- BoE-dated OIS showing ~52.5bp of cuts through year-end, ~1bp more dovish on the day.
OPTIONS: Expiries for Jul10 NY cut 1000ET (Source DTCC)
Jul-09 14:50
- EUR/USD: $1.1650(E2.5bln), $1.1685-00(E1.5bln), $1.1710-20(E616mln), $1.1735-50(E1.5bln), $1.1800(E1.3bln)
- USD/JPY: Y143.95-15($1.0bln), Y144.70-90($1.3bln), Y146.50-55($681mln), Y147.00($832mln)
- GBP/USD: $1.3490-10(Gbp529mln), $1.3570(Gbp540mln)
- EUR/GBP: Gbp0.8595-00(E815mln)
- AUD/USD: $0.6440-55(A$954mln), $0.6500(A$599mln), $0.6415-25(A$589mln), $0.6600(A$634mln)
- NZD/USD: $0.6000(N$517mln)
- USD/CAD: C$1.3625-35($1.0bln)
US STOCKS: Early Equities Roundup: Bid But Off Highs, IT & Media Outperforming
Jul-09 14:45
- Stocks are trading firmer early Wednesday, apparently tracking a rebound in Treasuries off yesterday's June 20 lows, projected rate cuts into year end gaining slightly ahead of this afternoon's June FOMC minutes release.
- Indexes did pare gains by midmorning, likely profit taking ahead of the minutes and some amount of wariness amid Pres Trump reiterating tariff threats via social media. Currently, the DJIA trades up 69.23 points (0.16%) at 44322.34, S&P E-Minis up 16.75 points (0.27%) at 6290.25, Nasdaq up 119 points (0.6%) at 20542.14.
- Communication Services and Information Technology sectors led gainers in the first half, interactive media and entertainment shares buoyed the former with Alphabet +2.80%, Warner Bros Discovery +2.59%, Meta Platforms +2.16% and Paramount Global +0.83%.
- THe Tech sector was supported by Arista Networks +2.20%, NVIDIA +2.10% (fist company to reach $4T market cap), Broadcom +1.76%, Microsoft +1.66% and Advanced Micro Devices +1.60%.
- On the flipside, Consumer Staples and Energy sectors underperformed in the first half, The Hershey Co -3.41%, Altria Group -2.66%, Monster Beverage -1.93% and Archer-Daniels-Midland -1.15% weighed on Staples while EQT Corp -1.59%, Targa Resources -1.53%, EOG Resources -1.43% and Kinder Morgan -1.39% kept the Energy sector under wraps.
