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STIR
The post-U.S. CPI pullback extends across most of the BoE-dated strip this morning, with terminal policy rate pricing hovering just below the 6.20% mark. The pullback from intraday hawkish cycle extremes sits at ~50bp as of typing, a couple of bp or so off today’s dovish base. Local headline flow has been fairly limited, with the impulse from yesterday’s U.S. CPI data reverberating around the wider core global FI space, allowing receiver-side flows, likely bolstered by profit taking, to dominate.
- The chart below sows the degree of flattening in play since last week’s hawkish closing extremes, as well as the outright moderation in pricing.
- When it comes to next month’s meeting, pricing is sticky, showing ~44bp of tightening. The latest round of hot wage data keeps traders firmly tilted towards back-to-back 50bp hikes from the Bank, even as some of the other labour market measures show signs of loosening from extremely tight levels. Next week’s CPI data will provide the final major data inputs ahead of the decision, with participants seemingly unconvinced that one CPI release will do enough to force a fresh moderation in the pace of BoE tightening after last month’s reversion up to 50bp steps.
| BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| Aug-23 | 5.368 | +43.8 |
| Sep-23 | 5.709 | +77.9 |
| Nov-23 | 5.953 | +102.3 |
| Dec-23 | 6.068 | +113.8 |
| Feb-24 | 6.112 | +118.2 |
| Mar-24 | 6.118 | +118.8 |
| May-24 | 6.087 | +115.7 |
| Jun-24 | 6.022 | +109.2 |
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
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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