Dovish Reversal In SONIA Extends Further

SONIA futures are flat to +6.0 through the blues.

• BoE-dated OIS runs little changed to 5bp softer through ’24 contracts, once again pricing the first full 25bp cut come the end of the June ’24 MPC, while ~105bp of cuts are priced through ’24 on the whole (vs. ~90bp at one point yesterday).
• Softer-than-expected Tokyo CPI data out of Japan and a dovish ECB sources piece from RTRS have aided the pre-gilt open move.
• Solid enough demand metrics at the latest 7-Year U.S. Tsy auction also factored into late Thursday price action.
• The sum of the above, coupled with a negative session for Chinese & HK equities, allows core global FI markets to operate above levels seen at yesterday’s gilt close.
• Cooling inflation allowed the latest domestic GfK consumer confidence print to register the least negative reading in ~2 years, although the headline measure remains comfortably below 0.
• The local docket is limited into the weekend, with domestic focus already on next week’s BoE meeting.