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BoE Peak Pricing Erases August's Decline; ECB Higher For 7th Day In 8

STIR
BoE peak hike pricing had fallen 6 days in 7 as of last Thursday's close, shedding 16bp of implied hikes over the cycle. But that decline has been almost completely reversed Friday and today, with a 2nd consecutive 7.6bp rise in rate pricing for Mar 2024 (at 5.88%, implying 63bp of further hikes). As such we're back to Aug 1st levels.
  • With no major domestic catalysts of note today, attention is on Tuesday's UK labour market data (which we previewed earlier), and of course CPI on Wednesday. Ahead of these, market implieds for the September meeting continues to edge toward a fully priced 25bp (now above 23bp, vs a low of 20bp last week), with 41bp cumulatively priced through the next two meetings.
  • Comparatively, ECB terminal hike pricing has had much less volatility, but has risen for 4 consecutive sessions and in 7 of the past 8 - and at just shy of 3.95% by Dec 2023, the highest since Jul 27.



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