GILTS: Off Lows As Support Holds & Oil Softens, 50bp BoE Cuts Priced Through Dec
Gilts trade away from lows after support in futures held and with oil prices edging lower. Still, yi...
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GILTS: Off Lows, Curve Twist Steepens
Gilts recover from session lows with oil moving further away from Asia-Pac highs (albeit holding comfortably above late Thursday levels) and with the recovery from overnight lows in the major global equity index futures stalling a little.
- More widely, attention remains on the Israel-Iran situation, with rhetoric not signalling de-escalation in the immediate term.
- Gilt futures trade as low as 92.23, breaking Friday’s low, before a recovery to 92.50, -15 on the day.
- The recent uptrend had taken the contract into overbought territory.
- Bears now target the 20-day EMA (92.04), which provides the first firm support level.
- Yields 1.5bp lower to 1.5bp higher, curve twist steepens.
- 2s10s in multi-week range, ~63.5bp last.
- 5s30s back above 120bp after Friday’s close below.
- Domestically, focus is on Wednesday’s CPI data (we have already flagged downside risks to that release) and Thursday’s BoE decision (softer economic growth and labour market data shouldn’t result in a cut at this stage, which will leave focus on the vote split).
- BoE-dated OIS back to pricing ~47bp of BoE cuts through year-end, little changed on the day after briefly showing ~45bp post-gilt open. 0.5bp priced for this week, 19bp through August, 24.5bp through September, 40bp through November.
- SONIA futures +1.5 to -1.5, strip twist steepens.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Jun-25 | 4.208 | -0.5 |
Aug-25 | 4.021 | -19.0 |
Sep-25 | 3.965 | -24.6 |
Nov-25 | 3.812 | -39.9 |
Dec-25 | 3.740 | -47.1 |
Feb-26 | 3.629 | -58.2 |
Mar-26 | 3.602 | -60.9 |
GERMAN T-BILL AUCTION RESULTS: 12-Month Bubill
| Type | 12-month Bubill |
| Maturity | Jun 17, 2026 |
| Allotted | E2.445bln |
| Previous | E2.265bln |
| Total sold | E3bln |
| Target | E3bln |
| Avg yield | 1.808% |
| Previous | 1.873% |
| Bid-to-cover | 2.14x |
| Previous | 2.65x |
| Bid-to-offer | 1.74x |
| Previous | 2x |
| Previous date | May 12, 2025 |
BUND TECHS: (U5) Corrective Pullback Extends
- RES 4: 132.42 2.000 proj of the May 14 - 20 - 22 price swing
- RES 3: 132.00 Round number resistance
- RES 2: 131.85/95 High Apr 22 and the bull trigger / High Jun 13
- RES 1: 131.06 50.0% retracement of the Jun 13 - 16 downleg
- PRICE: 130.49 @ 10:12 BST Jun 16
- SUP 1: 130.17 Intraday low
- SUP 2: 130.12 Low Jun 5 a key short-term support
- SUP 3: 129.30 Low May 22
- SUP 4: 128.97 Low May 14 and a reversal trigger
Bund futures have traded lower today, extending the reversal from Friday’s session high. For now, the move down is considered corrective and key short-term support to watch lies at 130.12, the Jun 5 low. A break of this level would highlight a stronger reversal and undermine the bullish theme. Key short-term resistance and the bull trigger, has been defined at 131.95, the Jun 13 high.
