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STIR: BoE Pricing Remains Pinned Between 50-60bp Of Cuts Through Dec

STIR
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BoE-dated OIS little changed to a couple of bp more dovish on the day across ’25 contracts as gilts recover from session lows.

  • Pricing for next week’s BoE decision is essentially at 0bp, with 18bp showing through May, 23bp through June, 37.5bp through August and 54bp through year-end.
  • The latter remains pinned between 50bp and 60bp.
  • We still look for the next cut to come in May.
  • Looking ahead, the latest BoE decision and labour market data are due on Thursday.
  • We are yet to see a sell-side preview expecting anything other than an on-hold BoE decision.
  • As a result, focus is set to fall on the vote split and any changes to the guidance.
  • On the vote split we see at least five of the nine MPC members voting for Bank Rate on hold.
  • Of the possible dissenters, Ramsden has previously dissented in favour of sequential cuts - we are unsure whether he will continue to do so after raising concerns about the Agents’ Pay Survey.
  • Taylor sounded a bit less dovish than he has done previously at the TSC testimony (but we still expect him to vote for a 25bp cut next week).
  • Mann previously voted for a 50bp cut, so we would expect her to either repeat that or vote for a 25bp cut.
  • Dhingra also voted for a 50bp cut - we expect another vote for a cut from her but don’t have a strong conviction surrounding the magnitude.
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BoE-dated OIS little changed to a couple of bp more dovish on the day across ’25 contracts as gilts recover from session lows.

  • Pricing for next week’s BoE decision is essentially at 0bp, with 18bp showing through May, 23bp through June, 37.5bp through August and 54bp through year-end.
  • The latter remains pinned between 50bp and 60bp.
  • We still look for the next cut to come in May.
  • Looking ahead, the latest BoE decision and labour market data are due on Thursday.
  • We are yet to see a sell-side preview expecting anything other than an on-hold BoE decision.
  • As a result, focus is set to fall on the vote split and any changes to the guidance.
  • On the vote split we see at least five of the nine MPC members voting for Bank Rate on hold.
  • Of the possible dissenters, Ramsden has previously dissented in favour of sequential cuts - we are unsure whether he will continue to do so after raising concerns about the Agents’ Pay Survey.
  • Taylor sounded a bit less dovish than he has done previously at the TSC testimony (but we still expect him to vote for a 25bp cut next week).
  • Mann previously voted for a 50bp cut, so we would expect her to either repeat that or vote for a 25bp cut.
  • Dhingra also voted for a 50bp cut - we expect another vote for a cut from her but don’t have a strong conviction surrounding the magnitude.