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STIR
BoE hike pricing soared yet again Wednesday following a strong UK inflation print, with terminal rates hitting a 6-handle having seen a 4-handle as recently as May 17th. ECB hike pricing ticked higher as well in sympathy, hitting 3-month highs.
- BoE terminal Bank Rate pricing +15.4bp to 6.06% (155bp of further hikes left in the cycle): BoE terminal Bank Rate pricing faded 7bp from the morning's highs, but still implies over 150bp of hikes to a peak above 6.00% in February 2024.
- Pricing for Thursday's BoE rate decision reached 37bp (nearly a 50/50 implied probability of either a 25bp or a 50bp hike), but faded to 34bp (around 65% / 35% prob of 25bp / 50bp).
- As stated in our BoE meeting preview, we could see a more hawkish vote split as a result of the CPI data, with up to three dissenters in favour of 50bp (in order of likelihood Mann, Haskel and Ramsden), but 25bp is probably still the baseline expectation.
- ECB terminal depo Rate pricing +3.9bp to 3.99% (50bp of further hikes left in the cycle): Dragged higher by the UK developments, implied terminal deposit rate pricing topped the 4.00% mark for the first time since March.
Source: MNI, BBG
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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