GILTS: Opening calls

Estoxx 50: -0.33%, Dax: -0.31%, CAC: -0.31%, FTSE -0.27%, SMI -0.50%

• RES 4: 166.69 High Oct 31 2024 and a key resistance
• RES 3: 166.10 High Nov 6         
• RES 2: 165.21/43 High May 13 / High Nov 8 2024 
• RES 1: 164.07 High May 15 
• PRICE: 162.75 @ 07:56 GMT May 21
• SUP 1: 162.28/15 50-day EMA / Low May 19      
• SUP 2: 161.60 Low May 6
• SUP 3: 160.99 Low Apr 22  
• SUP 4: 159.48 Low Apr 9  

EURJPY maintains a bearish tone following the pullback from its recent high and is trading closer to its latest lows. Recent weakness is considered corrective. However, the cross has tested a key support at 162.28, the 50-day EMA. A clear break of this level would undermine a bearish theme and signal scope for a deeper retracement. For bulls, a resumption of gains would refocus attention on the bull trigger at 165.21, the May 13 high.

Hawkish adjustment in GBP STIRs following this morning’s CPI data, although the move has faded from opening extremes.

• As we have noted elsewhere, while an element of an Easter effect was no doubt present, the readings, particularly services inflation, were still firm, even when adjusting for Easter.
• BoE-dated OIS shows 0bp of easing for next month, 11.5bp of cuts through August, 16bp through September, 28bp through November and 35bp through year-end.
• Contracts are little changed to 5bp more hawkish on the day.
• December MPC implied rates sit at the most hawkish level seen since April 10
• SONIA futures flat to -4.5.
• SFIZ5 filled the opening gap higher from April 3 before bouncing.
• Implied terminal rate pricing (proxied by SFIU6 at present) moves to 3.720% last.
• Little of note on the UK calendar for the remainder of the day, which will leave focus on macro inputs and continued digestion of the CPI data.