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Corrective Pullback Extends


Gains Considered Corrective


(M2) Broader Trend Condition Remains Bearish


(M2) Corrective Recovery

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SONIA and Euribor have moved lower almost in unison today, both less than the moves in Eurodollar futures.

  • SONIA futures normally move with a higher beta, but today's moves suggest we may be getting to a limit of how much can be priced into the UK curve. A February hike is around 99% priced at present with 4 hikes almost fully priced by the November MPC meeting - which would leave the Bank Rate at 1.25%.
  • Note the the Eurodollar curve is also fully pricing four hikes in 2022.
  • The Euribor strip is now pricing a 10bp hike almost fully by September and then almost fully pricing a second 10bp hike in December.
  • Given that the SONIA and Euribor strips have moved with a similar beta today, we will watch closely their movements in coming days - although this could largely be skewed by UK data with labour market data tomorrow, CPI data Wednesday and consumer confidence/retail sales data Friday.

MNI London Bureau | +44 203-865-3820 |
MNI London Bureau | +44 203-865-3820 |

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