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STIR: Just Over 70bp Of BoE Cuts Still Priced Through '25

STIR
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Modest dovish repricing in the UK short end holds, with gilts consolidating their morning rally and little of note on the macro front to shift BoE pricing.

  • BoE-dated OIS flat to 2bp more dovish on the day, showing 70.5bp of cuts through year-end. Dovish cycle extremes of ~74bp have not been retested.
  • We continue to look for cuts in both February & May, with 23bp and 42.5bp of cuts priced through those events at present.
  • The market has moved back towards our baseline view over the past couple of weeks, but probably needs fresh dovish cues to move closer towards fully discounting 50bp of cuts through May.
  • SONIA futures flat to +3.0.
  • Comments from BoE Governor Bailey kept away from direct monetary policy matters, with the BoE in its pre-meeting quiet period.

BoE Meeting

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Modest dovish repricing in the UK short end holds, with gilts consolidating their morning rally and little of note on the macro front to shift BoE pricing.

  • BoE-dated OIS flat to 2bp more dovish on the day, showing 70.5bp of cuts through year-end. Dovish cycle extremes of ~74bp have not been retested.
  • We continue to look for cuts in both February & May, with 23bp and 42.5bp of cuts priced through those events at present.
  • The market has moved back towards our baseline view over the past couple of weeks, but probably needs fresh dovish cues to move closer towards fully discounting 50bp of cuts through May.
  • SONIA futures flat to +3.0.
  • Comments from BoE Governor Bailey kept away from direct monetary policy matters, with the BoE in its pre-meeting quiet period.

BoE Meeting

Keep reading...Show less