IRAN: Iran Seizes Oil Tanker For "Violations"

The recent recovery in gilt futures has allowed an oversold condition to unwind, with our technical analyst still deeming the recovery to be corrective at this stage.

• Meanwhile, 10-Year UK gilt yields have retraced to operate back within the medium-term triangle parameters we had been monitoring across recent months.
• While the breaks on either side of the pattern in recent weeks negate the importance of the formation going forwards, the respect of the upper boundary during last week’s pullback in yields provided a point of note.
• That former boundary has been breached this morning, with gilt bulls now targeting the 50% retracement of the move from the February low to the March high in yields (4.676%), which protects the March 18 low (4.642%).
• The multi-week range now provides well-defined, albeit wide, horizontal boundaries (4.231% & 5.121%).
• Expect geopolitical and cross-market matters to continue to dominate in the immediate term, with heightened sensitivity to headlines in the lead up the U.S.-Iran discussions, set to start on Friday.
• Medium-term, the mix of the UK’s fiscal trajectory, political risks and BoE monetary policy settings are set to provide plenty of domestic inputs for gilts to adjust to.

Fig. 1: UK 10-Year Gilt Yield (%)

Source: MNI - Market News/Bloomberg Finance L.P.

Oil trades away from lows in the wake of headlines pointing to UAE & Kuwaiti defences dealing with attacks/missile threats despite the U.S.-Israel-Iran ceasefire agreement, with equities and bonds lower. Subsequent comments from U.S. Vice President Vance note the truce is "fragile".

UAE SAYS ITS AIR DEFENSES ARE NOW DEALING WITH MISSILE THREAT” Reuters