SWITZERLAND DATA: October KOF Stronger But Should Keep SNB Expectations Intact

• MNI: BAVARIA SEP CPI +0.4% M/M, +2.4% Y/Y

• MNI: GERMANY SEP UE RATE (SA) 6.3% (FCST 6.3%); AUG 6.3 %
• GERMANY SEP UE NET CHANGE (SA) +14K; AUG -7K
• GERMANY SEP UE TOTAL (SA) 2.976 MN; AUG 2.962 MN

Gilts look to global peers for cues, with U.S. government shutdown risk and softer-than-expected French CPI providing an early bid, before a pullback from highs as some resistance levels in wider core global FI markets hold.

• Gilts futures flat at ~90.90 with bulls unable to force a test of first resistance at the Sep 24 high (91.28). That leaves bears in technical control, with first support located at the Sep 26 low (90.26).
• Yields essentially unchanged across the curve, with 2s10s and 5s30s remaining in their steepening trend despite the recent flattening moves.
• Local fiscal risks remain evident, with focus on the November Budget.
• We have outlined Chancellor Reeves’ fiscal options if she chooses to break the government’s election pledges.
• GBP STIRs also little changed on the day, showing less than 5bp of easing through year end.
• We continue to suggest that the market is underpricing the odds of a cut in Q4, but note that such a move would likely require support from Governor Bailey, as well as Deputy Governor’s Ramsden & Breeden (in addition to dovish dissenters Dhingra & Taylor).
• Ramsden maintained his position as the most dovish MPC member that did not vote for a cut in September via his speech yesterday, with Breeden set to speak today. We will also hear from BoE’s Lombardelli & Mann today.
• No reaction to modest revisions in the final update to UK Q2 GDP data.