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Dovish BoE Repricing Extends A Touch On Domestic CPI

STIR

Softer than expected UK inflation data puts a bid into the SONIA strip at the open, although the move is relatively contained, at least in part owing to the size of yesterday’s U.S. CPI-induced rally

  • Contracts are off early highs, last showing flat to 5bp firmer through the blues, with the reds outperforming on the strip.
  • BoE-dated OIS is also off initial dovish session extremes, but still sits 1-4bp softer on the day.
  • A mere ~3.5bp of cumulative tightening is now priced over the next two MPC meetings.
  • Beyond there, a 25bp cut is essentially fully priced come the end of the June '24 MPC.
  • Dec ’24 BoE pricing now shows ~15bp of additional cumulative cuts vs. pre-U.S. CPI levels, with 3 25bp cuts more than fully priced through '24.
  • Comments from BoE hawk Haskel are due at the SONIA futures close.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Dec-235.214+2.7
Feb-245.223+3.6
Mar-245.154-3.3
May-245.051-13.6
Jun-244.945-24.2
Aug-244.819-36.7
Sep-244.686-50.1
Nov-244.541-64.6
Dec-244.422-76.5

Source: MNI - Market News/Bloomberg

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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