BRAZIL: SocGen Still Expects BCB Easing Cycle to Begin Early Next Year

• US TSY 17W AUCTION: NON-COMP BIDS $520 MLN FROM $63.000 BLN TOTAL

• US TSY 1Y-10M FRN AUCTION: NON-COMP BIDS $17 MLN FROM $28.000 BLN TOTAL

Gilts have generally taken cues from core global FI peers after the adjustment to this morning’s weak 15-Year supply from the DMO, with global curve steepening pressure resulting in twist steepening on the UK curve.

• Futures trade as low as 93.03, before a bounce to 93.15 last.
• The technical outlook in the contract remains bullish, next upside target is the June 13 high (93.68).
• Meanwhile, support is located at the 20-day EMA (92.51).
• Yields 1.5bp lower to 3bp higher.
• Benchmarks through 10s registered fresh June yield lows before the sell off ensued. May lows went unchallenged, leaving familiar ranges in play across the curve.
• 5s30s back above 125bp, while 2s10s is set to reclaim 60bp on a closing basis, with moves below that level remaining limited.
• SONIA futures +1.5 to -2.5, strip twist steepens.
• BoE-dated OIS steady, showing 52bp of cuts through year-end, with the next 25bp step fully discounted through September (~80% odds of a cut priced for August).
• Comments from BoE’s Breeden & Bailey are due tomorrow, as is lower tier CBI data and ’46 gilt supply.