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STIR
BoE hike pricing fell sharply Wednesday after soft CPI data pared back the implied terminal rate and odds of a half-point hike in August. ECB pricing meanwhile closed surprisingly steady after an early UK-induced dip.
- BoE terminal Bank Rate pricing -20.5bp to 5.88% (88bp of further hikes left in the cycle to Feb 2024). The 15-month low and 0.2ppt miss in headline and core inflation slashed terminal rate pricing below 6% for the first time since June 20, and it's now fallen 70bp from the July highs.
- Though with services inflation largely in line with expectations, the case for a 50bp as opposed to 25bp August BoE hike is seen to remain in play (though now a sub-50% proposition vs 65+% earlier this week). A cumulative 66bp (ie a further 30bp above Aug) is priced through the September meeting, with rates basically topping out between Dec 2023-Mar 2024.
- ECB terminal depo Rate pricing +0.2bp to 3.98% (48bp of further hikes left in the cycle to Dec 2023). Peak ECB pricing reversed an initial 5bp drop post-UK CPI to finish flat on the day, with expectations for a 25bp raise next Thursday ending slightly firmer (over 96% implied probability).
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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