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STIR: A Little Over 55bp Of BoE Cuts Priced Through Dec, Risk-Off Move Dominates

STIR
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The tariff-driven risk-off move has promoted modest dovish repricing in GBP STIRs.

  • BoE-dated OIS now shows ~56bp of cuts through year-end vs. ~52bp late yesterday. The contract sticks comfortably within the recent range, with current levels printed as recently as last Tuesday.
  • Further forwards, the strip moves back towards pricing 20bp of cuts through May, with the next 25bp cut fully discounted through June.
  • SONIA futures flat to +4.0, with some contracts threatening to break above last week’s highs.
  • Late Monday saw BoE dove Dhingra stress the need for further rate cuts given her views surrounding ongoing consumption weakness as she warned that gradual rate cuts of 25bp per quarter would still leave policy rates in restrictive territory come the end of the year.
  • This afternoon will bring comments from BoE chief economist Pill, as he delivers closing remarks at the Bank’s BEAR conference.
  • A reminder that we have suggested that Friday’s address from Deputy Governor Ramsden could provide the most interesting round of BoE communique this week. See our Gilt Week Ahead for more on our thinking surrounding that matter.

BoE Meeting

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The tariff-driven risk-off move has promoted modest dovish repricing in GBP STIRs.

  • BoE-dated OIS now shows ~56bp of cuts through year-end vs. ~52bp late yesterday. The contract sticks comfortably within the recent range, with current levels printed as recently as last Tuesday.
  • Further forwards, the strip moves back towards pricing 20bp of cuts through May, with the next 25bp cut fully discounted through June.
  • SONIA futures flat to +4.0, with some contracts threatening to break above last week’s highs.
  • Late Monday saw BoE dove Dhingra stress the need for further rate cuts given her views surrounding ongoing consumption weakness as she warned that gradual rate cuts of 25bp per quarter would still leave policy rates in restrictive territory come the end of the year.
  • This afternoon will bring comments from BoE chief economist Pill, as he delivers closing remarks at the Bank’s BEAR conference.
  • A reminder that we have suggested that Friday’s address from Deputy Governor Ramsden could provide the most interesting round of BoE communique this week. See our Gilt Week Ahead for more on our thinking surrounding that matter.

BoE Meeting

Keep reading...Show less