Comment: Solid volume and soaring open interest in this contract last week suggest many are acutely aware of the availability (or not) and cost of capital. The UK Treasury yield curve is still extremely steep, two’s/tens a whopping 300 basis points and really ought to flatten a bit soon. ‘Channel’ support gave way, as we warned last week, and the 26-day moving average limited the latest pull-back. Expect a little more sideways work for another week or two prior to a push up to new highs later this month.
Strategy: Buy at 98.780/98.700; stop below 98.600. First target 98.870, then 99.000/99.060.
