GBP STIRs See Hawkish Extension On CPI, 35bp Of ’24 Cuts Priced

Firmer-than-expected UK inflation data triggers another round of hawkish repricing in GBP STIRs, as the major Y/Y CPI metrics slow less than expected (CPI Services printed at a steady +3.8%).

• SONIA futures are flat to -9.5, a little off early session lows.
• BoE-dated OIS shows ~35bp of ’24 cuts, representing the shallowest cut pricing of the current cycle.
• A reminder that some suggested that BoE Governor Bailey hinted at the potential for the Bank to cut rates before the Fed late on Tuesday, following comments on differences in inflation on either side of the Atlantic.
• This, coupled with the low absolute level of easing priced in for '24, may be helping SONIA futures off lows.
• Meanwhile, Chancellor Hunt hinted at an Autumn election and suggested that the prospect of rate cuts later in the year would be welcomed by the electorate (the Conservatives still trail Labour by a wide margin in the opinion polls).
• Further BoE speak from Bailey, Greene & Haskel is due today.