BoE Pricing Tilts In Favour Of No Further Hikes

BoE-dated OIS has also been happy to track the swings in wider core global FI markets, with the added input of domestic (partial) labour market data to pointed to continued loosening when looking at the internals (ONS methodology alterations muddy headlines comparable) and slightly firmer than expected (but still contractionary) manufacturing PMI data feeding in at different points.

• Elsewhere, the latest RTRS poll noted that “the BoE is likely done with policy tightening and will leave Bank Rate at 5.25% on Nov. 2, according to the vast majority of economists polled by Reuters” (61/73 look for no change in rates, with the remaining 12 looking for a 25bp hike). Still, the view that the hiking cycle is over comes with varying degrees of conviction, with the same poll noting that “16 of 28 who answered an additional question said the chance of another hike this year was high.”
• Liquid contracts last show 1.5-4.5bp softer on the day, with the strip flattening.
• That leaves ~3bp of tightening showing for the November MPC, with less than even odds of one further hike seen further out the strip (terminal policy rate pricing is ~11.5bp above prevailing levels) after this morning’s labour market data.