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STIR
BoE and ECB cut pricing pulled back Tuesday, starting the year retracing late 2023's extremes.
- While there were few headline/macro catalysts on the day (final PMIs had little impact), the rate cut pullback ebbed and flowed with oil prices which gained sharply earlier in the session but reversed those gains.
There are 147bp of BoE cuts priced in 2024, but that's a pullback from 156bp seen on Dec 29.
- The first full 25bp BoE cut is priced by May (implied probability of a prospective 1st cut in March pulled back from roughly 70% to 60%), with consecutive 25bp cuts basically priced at the following 4 meetings.
ECB cut pricing remains aggressive, with 160bp of reductions implied through 2024, but that's 10bp less than seen at the previous session's open, and around 25bp less than seen at the Dec 27 close.
- That starts with a 50% probability of a first 25bp cut in March, following by 1.5 cuts through April, and nearly three (67bp) through June. Nearly 4 cuts are implied by July, nearly 5 by September, and over 5 by October (141bp).
- ECB's de Cos stressed that the timing of the ECB's first rate cut will be data dependent.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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