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Markets pricing around a 50/50 probability of a 75bp or 100bp Nov hike

  • STIR futures are up to 12 ticks higher today, helped largely by comments from BOE Deputy Governor Broadbent. He implied that risks to market rates are to the downside while also noting that if rates rose in line with market pricing, GDP would be around 4.5ppt by the end of 2025.
  • Markets are now pricing in around 88bp for the November MPC meeting (roughly a 50/50 chance of 75bp or 100bp), down from a peak above 150bp (although some of that included the probability of an intermeeting emergency hike). Yesterday we were around 7bp higher and we had been trading roughly between 110-120bp after the Bank denied that there would be an emergency rate hike and as it conducted its temporary bond purchases.
  • A cumulative 161bp is priced by the December meeting, down from a peak in excess of 250bp. Markets also see the terminal rate a little above 5.00% (from around 5.25% yesterday and a peak of over 6.25%.

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