Little Movement In BoE Pricing Today, Incremental Hawkish Ticks On Recent Bond Cheapening

BoE-dated OIS through the end of '24 is flat to ~2.5bp firmer vs. Friday’s settlement levels, with little in the way of meaningful traction away from unchanged levels witnessed thus far.

• The recent cheapening in wider core global FI markets has biased pricing in a modestly hawkish direction over the last hour or so.
• That leaves terminal policy rate pricing ~7bp above prevailing levels.
• Further out, markets continue to price over 80% odds of a 25bp cut (from prevailing rate levels) through the end of the Aug ’24 MPC, after more than fully discounting such a step in the wake of comments from BoE chief economist Pill last Monday (as he essentially provided a bit of a green light for market pricing of a cut over that horizon).
• As noted elsewhere, speculation re: the Budget and the potential for pre-election tax cuts in ’24 has provided the most notable sound bites for markets thus far, although it has been the latest government cabinet reshuffle that has drawn the most attention within the wider domestic press.
• We didn’t get anything in the way of meaningful headlines on the wires from BoE MPC newcomer Breeden.
• BoE MPC hawk Mann will speak later (on the topic of climate and monetary policy).
• Tier one UK data is sprinkled through the week, with the labour market (Tuesday), inflation (Wednesday) and retail sales (Friday) reports providing the focal points.