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STIR: Hawkish Move In GBP STIRs On GDP, Under 55bp Of Cuts Priced Through '25

STIR
BulletMarketsFixed Income BulletsForeign Exchange Bullets

Firmer-than-expected GDP data promotes some hawkish repricing in GBP STIRs.

  • BoE-dated OIS shows 53.5bp of cuts through year-end vs. ~60bp late yesterday.
  • SONIA futures flat to -3.5, contracts through yesterday’s lows.
  • Overall, we don't think that the data really moves the needle for the March or May MPC decisions.
  • The BoE often notes that it doesn’t make a huge difference if GDP surprises by a couple of tenths.
  • Elsewhere, BoE chief economist Pill stressed that the Bank needs to move cautiously when it comes to further rate cuts. We don’t think that his interview with RTRS provided much new substance. We still expect him to vote for a cut in May and not in March. Greater details in a previous bullet.
  • Little else of note on the UK calendar today, which will leave focus on the digestion of the matters above and macro cues.
  • Today’s key macro inputs include U.S. PPI data, tariff headlines and comments surrounding the Russia/Ukraine conflict after U.S. President Trump agreed to "start negotiations immediately" to end the war in Ukraine.

BoE Meeting

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Firmer-than-expected GDP data promotes some hawkish repricing in GBP STIRs.

  • BoE-dated OIS shows 53.5bp of cuts through year-end vs. ~60bp late yesterday.
  • SONIA futures flat to -3.5, contracts through yesterday’s lows.
  • Overall, we don't think that the data really moves the needle for the March or May MPC decisions.
  • The BoE often notes that it doesn’t make a huge difference if GDP surprises by a couple of tenths.
  • Elsewhere, BoE chief economist Pill stressed that the Bank needs to move cautiously when it comes to further rate cuts. We don’t think that his interview with RTRS provided much new substance. We still expect him to vote for a cut in May and not in March. Greater details in a previous bullet.
  • Little else of note on the UK calendar today, which will leave focus on the digestion of the matters above and macro cues.
  • Today’s key macro inputs include U.S. PPI data, tariff headlines and comments surrounding the Russia/Ukraine conflict after U.S. President Trump agreed to "start negotiations immediately" to end the war in Ukraine.

BoE Meeting

Keep reading...Show less