Free Trial

GBP STIRs Move Back Towards Fully Discounting August Cut

STIR

GBP STIR markets edge away from early hawkish session extremes alongside the previously covered recovery in core global FI markets.

  • SONIA futures are little changed to +3.0 through the blues.
  • ’24 BoE-dated OIS contracts are little changed to 2bp softer on the day, nearly fully pricing a 25bp cut through the end of the August MPC (a scenario we had flagged as likely despite the hawkish repricing seen in recent weeks). Further out, ~53bp of ’24 cuts are priced.
  • Friday’s dovish offering from BoE’s Ramsden continues to dominate discussions, while geopolitical headline flow and lower crude oil prices also factor into the move.
  • Any impact from the previously covered local fiscal speculation and house price data has been negated by the above matters.
  • Friday saw Goldman Sachs suggest that “the UK front-end is underpricing the risk of BoE cuts.” They flagged recent comments from the BoE leadership in their considerations. They also stressed that retail sales remain weak and the quantity side of the labour market data has weakened (despite some uncertainty re: the latter). As a result, they believe that BoE pricing beyond June to end-2024 will flatten into the May MPC and April inflation data.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
May-245.179-1.9
Jun-245.082-11.7
Aug-244.954-24.4
Sep-244.868-33.1
Nov-244.750-44.9
Dec-244.670-52.9
228 words

To read the full story

Close

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.

GBP STIR markets edge away from early hawkish session extremes alongside the previously covered recovery in core global FI markets.

  • SONIA futures are little changed to +3.0 through the blues.
  • ’24 BoE-dated OIS contracts are little changed to 2bp softer on the day, nearly fully pricing a 25bp cut through the end of the August MPC (a scenario we had flagged as likely despite the hawkish repricing seen in recent weeks). Further out, ~53bp of ’24 cuts are priced.
  • Friday’s dovish offering from BoE’s Ramsden continues to dominate discussions, while geopolitical headline flow and lower crude oil prices also factor into the move.
  • Any impact from the previously covered local fiscal speculation and house price data has been negated by the above matters.
  • Friday saw Goldman Sachs suggest that “the UK front-end is underpricing the risk of BoE cuts.” They flagged recent comments from the BoE leadership in their considerations. They also stressed that retail sales remain weak and the quantity side of the labour market data has weakened (despite some uncertainty re: the latter). As a result, they believe that BoE pricing beyond June to end-2024 will flatten into the May MPC and April inflation data.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
May-245.179-1.9
Jun-245.082-11.7
Aug-244.954-24.4
Sep-244.868-33.1
Nov-244.750-44.9
Dec-244.670-52.9