UK debt and STIR futures remain underpinned as Italian fiscal concerns grow

Gilts have eased back from best levels in line with Bunds (latter just off a new Eurex low at 158.42, +36 ticks), to 120.95 vs 121.10 at one stage, but are still some way above yesterday’s Liffe settlement (120.78) as pressure persists in Italy following the coalition Government’s decision to push the boat out on the 2019 budget. Meanwhile, the Short Sterling strip has flattened a tad further (flat/-1 tick to 2 ticks above parity) post-Fed and ahead of the last UK Q2 GDP revision before a speech from BoE’s Ramsden this afternoon. However, domestic markets are likely to take their cues from elsewhere again as September and Q3 ends, barring any material Brexit developments or headlines.