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STIR: Around 65bp Of BoE Cuts Priced Through Year-End, Friday PMIs Eyed

STIR
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GBP STIRs have taken cues from the long end today, after the domestic labour market data had little lasting impact in pre-gilt open trade.

  • BoE-dated OIS shows 64.5bp of cuts through year-end, with 22bp of cuts priced for February, 27bp through March and 40.5bp through May.
  • ~62bp of cuts were priced through year-end at yesterday's close.
  • The front end of that profile continues to look a little flat to us, as we still look for cuts at both the February and May meetings, with more information needed to provide a meaningful view beyond the latter decision. Still, we are cognisant of the correction from recent hawkish extremes (~36bp of cuts were priced through '25 at one point last Tuesday) and fiscal risks within the UK (and abroad).
  • SONIA futures are 0.5-6.0 higher on the day, SFIZ5 and Z6 remain below year-to-date highs.
  • A reminder that the BoE has de-emphasised the importance of the labour market data, which increases the importance of the likes of the PMI data (preliminary PMI releases due Friday). 

BoE Meeting

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GBP STIRs have taken cues from the long end today, after the domestic labour market data had little lasting impact in pre-gilt open trade.

  • BoE-dated OIS shows 64.5bp of cuts through year-end, with 22bp of cuts priced for February, 27bp through March and 40.5bp through May.
  • ~62bp of cuts were priced through year-end at yesterday's close.
  • The front end of that profile continues to look a little flat to us, as we still look for cuts at both the February and May meetings, with more information needed to provide a meaningful view beyond the latter decision. Still, we are cognisant of the correction from recent hawkish extremes (~36bp of cuts were priced through '25 at one point last Tuesday) and fiscal risks within the UK (and abroad).
  • SONIA futures are 0.5-6.0 higher on the day, SFIZ5 and Z6 remain below year-to-date highs.
  • A reminder that the BoE has de-emphasised the importance of the labour market data, which increases the importance of the likes of the PMI data (preliminary PMI releases due Friday). 

BoE Meeting

Keep reading...Show less