J.P.Morgan Recommend Receiving Aug ’23 BoE-Dated OIS

Late on Friday J.P.Morgan noted that “the BoE left forward guidance language unchanged from the May meeting with no reference to “responding forcefully” nor any new language to indicate where the BoE sees terminal rate. This keeps a 50bp hike for August on the table but in our view, does not give a clear impression of a sequence of further 50bp hikes.”

• “There is clear data dependency over the coming months and the BoE will likely upgrade its inflation forecasts at the August meeting which would raise the bar for delivering another 50bp hike at that meeting. Around 45bp of hikes are priced for August and we recommend receiving Aug ‘23 MPC OIS.”
• The recommendation came with the contract trading at 538.6bp.