SCHATZ TECHS: (Z6) Monitoring Support

Dovish adjustments seen in GBP STIRs seen through early London trade on comments made by hawkish BoE dissenter Pill, who expressed some scepticism when it comes to the idea that that the BoE will need to hike rates by the ~100bp that is currently priced into markets. He went on to note that the Bank would need to see “more concrete evidence” of risks to tighten by that amount.

• This comes after BoE Governor Bailey reiterated the idea that the energy shock is getting harder to avoid, despite limited signs of inflationary impact in the UK at this stage.
• BoE-dated OIS flat to 3bp less hawkish across liquid contacts, showing 24bp of tightening for next month, 38bp through December and 96bp through June.
• SONIA futures little changed to +6.0. SFIZ7 +2.5 vs. pre-Pill levels.
• Elsewhere, the latest Deloitte CFO survey revealed that “CFOs have revised their expectations for both inflation and interest rates over the next 12 months. They now expect inflation to be 3.4% in a year's time, up from 3.0% in the previous survey%.” The survey also noted that “cost reduction remains the top priority.”
• Little of note on the UK macro calendar for the remainder of the day.

• It is another negative start for the Dollar with Yields lower Overall going into the European hours.
• The Greenback is in the red against all G10s ahead of the US CPI later today.
• The Aussie leads and is up 0.24% and testing a new intraday highs at the time of typing.
• AUDUSD is up 0.8% from Yesterday's low and could see some upside traction towards the next immediate resistance seen at 0.7014 20-day EMA.
• The NOK is the second best performer, up 0.21% despite the lower Oil.
• USDNOK is targeting the immediate 50% retracement level of the September low to the October high situated at ~9.4900.
• That range represented a 5.52% bounce off the September low for the USDNOK (see chart).

(Chart source: MNI/Bloomberg Finance LP).

Gilts have rallied on the back of comments made by hawkish BoE dissenter Pill, who expressed some scepticism when it comes to the idea that that the BoE will need to hike rates by the ~100bp that is currently priced into markets. He went on to note that the Bank would need to see “more concrete evidence” of risks to tighten by that amount.

• This comes after BoE Governor Bailey reiterated the idea that the energy shock is getting harder to avoid, despite limited signs of inflationary impact in the UK at this stage.
• Futures +31 at 84.17.
• The contract continues to trade above last week's lows. Still, a bearish cycle remains intact and a fresh cycle low on Oct 10 reinforces the bear theme. The recent low is the lowest price since ‘90. Note too that MA studies are in a bear-mode position, highlighting a dominant downtrend. Sights are on 82.77, a Fibonacci projection. Key short-term resistance is seen at 85.20, the 50-day EMA.
• On the fiscal side, the FT reports that Chancellor Healey is expected to finance any additional spending via tax hikes or lower spending in other areas, as opposed to boosting debt issuance in the upcoming Budget announcement.
• Reports also suggested that he will target GBP1bln of extra revenue from a tax crackdown on online marketplaces.
• Elsewhere, the latest Deloitte CFO survey revealed that “CFOs have revised their expectations for both inflation and interest rates over the next 12 months. They now expect inflation to be 3.4% in a year's time, up from 3.0% in the previous survey%.” The survey also noted that “cost reduction remains the top priority.”
• Little of note on the UK macro calendar for the remainder of the day.
• On the supply front, the DMO will come to market with GBP5.0bln of the 4.625% May-30 gilt.