GILTS: Bear Flattening As Energy Firms

Gilts remain under pressure on the day as energy firms on the back of the hardline rhetoric out of Iran and fresh damage to a vessel in the Strait of Hormuz. * Generally stronger-than-expected global flash PMI data has also factored into the move. * Futures have traded as low as 84.86. * First support at 84.69 remains intact at this stage, * Yields 5-12bp higher, curve sees some aggressive bear flattening. * 2s10s to fresh multi-month lows, although the March low (34.8bp) is still ~7.5bp below prevailing levels. * 5s30s remains above the month to-date low (82.4bp). * GBP STIRs also see an aggressive hawkish swing. SONIA futures as much as 15.5 ticks lower vs. settlement at typing, although cycle lows are intact/untested. BoE-dated OIS back to pricing ~105bp of tightening through June vs. ~90bp at one stage this morning. * Energy price swings remain the key driver intraday. ------------------------------------------------------------------------------- BoE Meeting SONIA BoE-Dated OIS (%) Difference vs. Current Effective SONIA (bp) Nov-26 3.955 +22.5 Dec-26 4.131 +40.1 Feb-27 4.352 +62.2 Mar-27 4.521 +79.0 Apr-27 4.685 +95.5 Jun-27 4.774 +104.4