Local Fiscal Matters & Broader Bond Bid Support SONIA Futures

SONIA futures move higher, with the wider bid in core global FI markets and domestic fiscal matters likely feeding in.

• Contracts run flat to +7.0 through the blues.
• BoE-dated OIS is little changed to 4bp softer through ’24 contracts. That helps reverse some of Tuesday's late pay-side flow and leaves ~106.5bp of cuts priced through '24 at typing.
• The Times has reported that Chancellor Hunt has “warned the cabinet that tax cuts in the spring budget may be smaller than expected because of “major structural weaknesses” in the economy.” This could curtail expectations re: meaningful fiscal easing which had become more prominent post-Autumn Statement/in recent weeks.
• Elsewhere, the Times Shadow MPC provided an 8-1 ‘vote’ re: tomorrow’s BoE decision, with the lone dissenter ‘voting’ for a hike.
• More widely, softer e-mini futures in the wake of U.S big tech earnings and softer-than-expected Australia CPI data caught the eye after the gilt close.
• Lower tier local data has seen an uptick in the Lloyds Business Barometer and firmer-than-expected Nationwide House Price Index readings.
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