CPI Has Hawkish Feedthrough Into SONIA

The firmer-than-expected domestic CPI data (detailed elsewhere) makes its presence felt, with the SONIA futures strip showing 0.5-15.0bp lower early today.

• Some feedthrough from the latest round of hawkish ECB-speak will also be feeding in (comments from ECB President Lagarde re: a likely rate cut by the summer limit early hawkish flow), although the domestic data is the major driver.
• BoE-dated OIS moves in sync, with ’24 MPC meeting contracts 0.5-13.5bp firmer on the day.
• That leaves the strip pricing ~116.5bp of cuts through ’24 vs. ~130bp at yesterday’s close. Further forward, May MPC pricing sees ~3bp of easing come out of pricing, leaving ~14bp of cuts priced over that horizon.
• Outside of the data, local headline flow has focused on the latest round of headwinds for PM Sunak, with resignations and rebellion seen within the Conservative Party re: the controversial Rwanda bill. This isn’t a meaningful input for markets, but further punctuates the PM’s struggles.
• House price index data rounds off the local data docket today.