Fed Done, BOE Upcoming

Bonds have moved higher this morning, but remain off yesterday's highs. The FOMC tapering announcement yesterday was in line with expectations but Powell was fairly dovish, stating that the Fed wouldn't know until at least mid-2022 if the economy was strong enough for a hike (a slower lift off than markets price). Lagarde has also been pushing back against 2022 ECB hikes. However, the moves higher seem to coincide with the gilt open at 8:00GMT so suggest there could be some late positioning ahead of today's BOE meeting.

• Markets price a 15bp hike from the BOE today and then rates at 1.25% by the end of next year. As we have discussed in our BOE preview, we think there will be a 15bp hike on balance but would prefer the Bank waited until December. The decision will be at 12:00GMT with the press conference at 12:30GMT.
• TY1 futures are up 0-1 today at 130-25+ with 10y UST yields down -2.7bp at 1.578% and 2y yields down -0.8bp at 0.461%.
• Bund futures are up 0.20 today at 169.54 with 10y Bund yields down -1.5bp at -0.185% and Schatz yields down -2.5bp at -0.718%.
• Gilt futures are up 0.31 today at 125.11 with 10y yields down -3.3bp at 1.038% and 2y yields down -3.2bp at 0.655%.