BoE-Dated OIS Terminal Rate Pricing Oscillates Around 6.40%

BoE-dated OIS has eased a touch this morning, with some signs of a loosening domestic labour market (from very tight levels) eventually outweighing firmer than expected wage metrics in the latest round of monthly labour market data.

• Pricing is little changed to ~7bp lower across the strip, with participants mulling the BoE’s reaction function, which, as we have covered previously (via both our markets and policy team channels), is more rough and ready than it has been historically.
• The pull away from recent hawkish extremes has extended.
• That leaves ~47bp of tightening priced for next month’s MPC decision, with the market attributing near certain odds of back-to-back 50bp hikes at present. Meanwhile, terminal policy rate pricing has regained the 6.40% level after a show below earlier today.
• Elsewhere, local headline flow has been somewhat sparse, outside of confirmation that the average UK 2-Year fixed mortgage rate has topped its mini-Budget extremes.