GILTS: Firmer On Weaker Stocks & Solid Green Auction Demand

Gilts extend higher, with core global FI markets supported by the move lower in e-minis (tech earnings and trade war worry drive e-minis lower).

• Decent demand metrics at the latest 1.50% Jul-53 green gilt auction may have factored in during recent trade.
• The auction cover topped the average across all re-openings since February ’23 (3.20x vs. average 2.94 & high of 3.26x), while the tail was narrow at 0.3bp and the low price cleared above pre-auction mids.
• Futures as high as 93.47, +70 on the day, as the bullish short-term corrective phase remains intact.
• Contract nears resistance at the Feb 3 high (93.54).
• A break there would expose Fibonacci resistance (93.64) which protects round-number resistance (94.00).
• Yields 3.5-7.0bp lower as the curve flattens, year-to-date lows intact across all benchmarks.
• BoE-dated OIS to fresh cycle dovish extremes of ~85.6bp.
• SONIA futures flat to +7.0. Dec high in SFIZ5 (96.190) untested.
• Cross-market and macro cues are set to dominate ahead of tomorrow’s BoE decision.
• Our full preview of the BoE decision can be found here.