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STIR: A Little Over 55bp Of BoE Cuts Priced Through '25

STIR
BulletMarketsFixed Income BulletsForeign Exchange Bullets

Little net movement in GBP STIR pricing this morning.

  • BoE-dated OIS shows 21.5bp of cuts for next month, just under 25bp of cuts through March, 36bp through May, 40bp through June and 56bp of easing through year-end.
  • A reminder that year-end pricing registered a fresh hawkish cycle extreme of ~36bp late on Tuesday, before UK & U.S. CPI drove dovish repricing on Wednesday.
  • The market-implied rate cut profile continues to look a little flat to us, given that we continue to expect cuts in February and May.
  • SONIA futures +2.5 to -1.0.
  • BoE dovish dissenter Taylor pointed to the potential need for as many 5-6 rate cuts in ’25 on Wednesday.
  • Taylor stressed his preference for pre-emptive cuts, given continually increasing risks of the Bank’s case 1 scenario and with bank rate still far above his neutral estimate of 2-3%.
  • This morning’s monthly economic activity data won’t be consequential for monetary policy settings.

BoE Meeting

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Little net movement in GBP STIR pricing this morning.

  • BoE-dated OIS shows 21.5bp of cuts for next month, just under 25bp of cuts through March, 36bp through May, 40bp through June and 56bp of easing through year-end.
  • A reminder that year-end pricing registered a fresh hawkish cycle extreme of ~36bp late on Tuesday, before UK & U.S. CPI drove dovish repricing on Wednesday.
  • The market-implied rate cut profile continues to look a little flat to us, given that we continue to expect cuts in February and May.
  • SONIA futures +2.5 to -1.0.
  • BoE dovish dissenter Taylor pointed to the potential need for as many 5-6 rate cuts in ’25 on Wednesday.
  • Taylor stressed his preference for pre-emptive cuts, given continually increasing risks of the Bank’s case 1 scenario and with bank rate still far above his neutral estimate of 2-3%.
  • This morning’s monthly economic activity data won’t be consequential for monetary policy settings.

BoE Meeting

Keep reading...Show less