Drifting higher this morning

STIR futures are drifting higher this morning, with Asian and US equity futures moving a little south and despite European equities largely flat on the day. There have been no real headline drivers this morning, with yesterday's FOMC Minutes giving little new news.

• The Eurodollar strip has seen Whites move 1-5 ticks higher with Reds 2.5-4.5 ticks higher and the rest of the strip 2.0-2.5 ticks higher. Markets price 51bp for June, 98bp for July not far from the 95bp post-May meeting lows), 130bp by September and 177bp by year-end (which is the lowest since the May meeting).
• The SONIA strip is around 1-2 ticks higher across the curve. The market-implied probability of a 50bp hike by August reduced from around 65% at Monday's close to a low of around 30% On Tuesday and is now back to around 35%. June is now priced for 28bp, August 59bp, September 82bp with 118bp by year-end (from 129bp at Monday's close). The focus today will be on whether the government unveils its cost of living strategy, and how much that will impact broader inflation and consumer spending.
• The Euribor strip is also 1-2 ticks higher across the curve. Markets now price 33bp by July (cumulatively), 55bp by September, 83bp by October and 99bp by year-end (i.e. one 25bp hike per meeting starting in July).