Dovish Move In SONIA As Global Bonds Firm Post-Settlement

The post-SONIA settlement richening in wider core global FI markets (see some of the drivers in our earlier bullet) leaves contracts on the strip running 0.5-6.5bp firmer in pre-gilt trade, a little off best levels.

• BoE-dated OIS is 0.5-4.5bp softer on the day, showing ~125bp of cuts through ’24.
• This morning’s monthly round of UK economic activity data won’t shift the economic/BoE narrative, but has probably capped the rally in SONIA futures.
• Services drove the upside surprise in the monthly GDP data - with industrial production and construction activity both lower than expected.
• Next week's labour market and inflation data remain far more important re: monetary policy in the short-term.
• Local news flow has focused on the U.S. & UK led air strike of Houthi-related targets in Yemen, a factor that fed into yesterday’s late bond rally.
• The local docket is essentially empty into the weekend.