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Futures continue to move higher

  • SONIA futures continue their repricing following yesterday's dovish MPC meeting.
  • We have seen Reds move up to 14 ticks higher today, making cumulative moves of over 30 ticks since Wednesday's close.
  • We still think that there is more scope for the rally to continue.
  • We think the BoE's reaction function is transitioning from being solely concerned with inflation expectations to also taking into account medium-term growth expectations. This is partly a function of rates moving closer to neutral, and partly as the growth/inflation trade-off continues to worsen.
  • Markets are still pricing in 32bp for May, 97bp by September and 116bp by year-end.

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