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Expectations update - SONIA to open lower

BOE
    • Given the moves seen this morning in GBP, and further downside moves in Euribor and Eurodollar futures, expect SONIA futures to open sharply lower again this morning.
  • There has been a huge repricing in terms of both market pricing and analyst expectations following both the September MPC meeting and the government’s fiscal update (“Growth Plan”).
  • Of the analysts that have explicitly updated or reaffirmed their views following the latter, 12/15 (80%) look for a 75bp hike in November while markets at Friday’s close priced around 89bp.
  • Expectations for the terminal rate among those same analysts saw a median of 4.00%, with 80% of analysts expecting a terminal rate in the 3.50-4.25% range.
  • This is considerably lower than the 5.50% terminal rate markets were pricing on Friday.
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    • Given the moves seen this morning in GBP, and further downside moves in Euribor and Eurodollar futures, expect SONIA futures to open sharply lower again this morning.
  • There has been a huge repricing in terms of both market pricing and analyst expectations following both the September MPC meeting and the government’s fiscal update (“Growth Plan”).
  • Of the analysts that have explicitly updated or reaffirmed their views following the latter, 12/15 (80%) look for a 75bp hike in November while markets at Friday’s close priced around 89bp.
  • Expectations for the terminal rate among those same analysts saw a median of 4.00%, with 80% of analysts expecting a terminal rate in the 3.50-4.25% range.
  • This is considerably lower than the 5.50% terminal rate markets were pricing on Friday.