Markets Move To Price 125bp Of '24 BoE Cuts Post-Fed

Dovish Fed feedthrough ripples through UK STIRs early today, leaving SONIA futures +0.5 to +21.0, as the reds outperform.

• BoE-dated OIS sits flat to 23bp lower through ’24 MPC contracts.
• The first 25bp cut is now more than fully discounted come the end of the May '24 MPC,, with ~16bp of cuts showing for the March '24 meeting. Note a March Fed cut is now fully priced into U.S. STIR markets.
• Markets briefly priced a little over 125bp of BoE cuts through '24 on the whole i.e. 5x 25bp cuts were fully priced.
• The space is a little off early dovish extremes as core global FI markets find a bit of a ceiling, at least for now.
• The BoE decision headlines the domestic docket today.
• There is a unanimous expectation amongst sell-side economists that the MPC will vote to keep Bank Rate on hold at 5.25% - with market pricing also endorsing this view and pricing a negligible chance of any other outcome. However, the decision still has plenty to watch with the vote split and forward guidance the most obvious potential drivers of the initial market reaction.
• You can find out full preview of the event here.