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Monday Sees Deeper BoE and ECB Cuts Implied From Peak

STIR
  • BoE terminal rate pricing continued to grind lower Monday, with a 2.5bp drop bringing it back to the lowest closing level since Sept 25th and implying just under 14bp in hikes left in the cycle to Feb 2024 (with a 1-in-4 implied chance of a 25bp raise in November).
  • Today's moves saw 6bp more cuts implied for the 12 months from the peak through Q1 2025, with 69bp in reductions expected, which is the most seen since Sep 29th.
  • ECB terminal pricing pared Friday's modest rise on Monday, currently implying just 1bp left in the hiking cycle to December before a full 25bp rate cut priced by June 2024.
  • 78bp of cuts are implied over the year from the peak in Dec 2023 to end-2024, 11bp more than seen at Friday's close and the most implied since early June.

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