BoE Pricing In Familiar Territory

Firmer-than-expected Japanese CPI data failed to provide any lasting pressure for core global FI markets.

• TY and Bund futures are off Monday lows.
• SONIA futures -0.5 to +0.5 through the blues, volume is very light.
• BoE-dated OIS is virtually unchanged across ’24 contracts.
• The first 25bp cut is essentially fully discounted come the end of the Aug ’24 MPC.
• 63.5bp of cumulative cuts are shown through the Dec ’24 MPC.
• Local headline flow has centred on fiscal speculation, with more measured fiscal easing now seen vs. a few weeks ago.
• The IFS has warned that Chancellor Hunt does not have the fiscal headroom to prevent the UK tax burden from hitting a fresh record high.
• All else equal, more modest fiscal easing slightly weakens one of the arguments for higher for longer interest rates.
• BRC shop price index data continued to slow in Feb.
• Comments from BoE Deputy Governor Ramsden are due later today (13:40 London).