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Most SONIA Futures Look Through Yesterday's Lows Before Stabilising, ~30bp Of '24 Cuts Priced

STIR

Hawkish moves were seen in GBP STIRs alongside the broader weakness in core global FI markets, before the revised UoM sentiment data out of the U.S. allowed wider core global FI to edge away from session lows (they had already turned ahead of the data).

  • SONIA futures generally moved below yesterday’s lows during the sell off but have recovered from worst levels to trade +0.5 to -1.0 last.
  • ~31bp of cuts are priced into BoE-dated OIS through year end. The metric’s earlier move below 30bp of cuts failed to challenge the hawkish extremes seen in April (closer to 25bp).
  • Political matters continue to dominate UK headlines and client discussions.
  • Businesses seem largely at ease with the prospect of a Labour government, albeit with plenty of questions evident surrounding the party’s ultimate policy goals.
  • Opinion polls will be watched in the weeks ahead, with the greatest risk to markets seemingly coming in the form of any meaningful narrowing of the Labour lead resulting in elevated hung parliament-linked uncertainty.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Jun-245.195-0.5
Aug-245.119-8.1
Sep-245.059-14.1
Nov-244.956-24.4
Dec-244.886-31.4
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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