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Pill’s Comments On Rate Cuts Provide Some Support For SONIA

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The recent, modest drift higher in core global FI yields helps cap SONIA futures in pre-gilt trade, after late Monday comments from BoE chief economist Pill provided support into the close/at the re-open.

  • That leaves contracts running -0.25 to +5.0 through the blues, with the front end of the reds outperforming and most contracts sitting just off post-settlement/early Tuesday highs.
  • As a reminder, Pill noted that market pricing of a first rate cut in the summer of ’24 “doesn't seem totally unreasonable, at least to me… It is at that point you might consider or reassess, if nothing new has happened, where we are going to have to be.”
  • BoE-dated OIS prices 24.5bp of cuts from prevailing effective levels through August ’24 i.e. a 25bp rate cut is now essentially fully discounted over that horizon, given Pill’s acknowledgement re: market pricing.
  • Overnight, the BRC like-for-like retail sales monitor recorded the second shallowest round of Y/Y growth seen in ’23.
  • Meanwhile, the October Halifax house price metric revealed the first M/M rise (+1.1%) in 7 months, with a lack of supply the touted driving factor. Still, prices were -3.2% Y/Y, slowing from the -4.5% seen in September.
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The recent, modest drift higher in core global FI yields helps cap SONIA futures in pre-gilt trade, after late Monday comments from BoE chief economist Pill provided support into the close/at the re-open.

  • That leaves contracts running -0.25 to +5.0 through the blues, with the front end of the reds outperforming and most contracts sitting just off post-settlement/early Tuesday highs.
  • As a reminder, Pill noted that market pricing of a first rate cut in the summer of ’24 “doesn't seem totally unreasonable, at least to me… It is at that point you might consider or reassess, if nothing new has happened, where we are going to have to be.”
  • BoE-dated OIS prices 24.5bp of cuts from prevailing effective levels through August ’24 i.e. a 25bp rate cut is now essentially fully discounted over that horizon, given Pill’s acknowledgement re: market pricing.
  • Overnight, the BRC like-for-like retail sales monitor recorded the second shallowest round of Y/Y growth seen in ’23.
  • Meanwhile, the October Halifax house price metric revealed the first M/M rise (+1.1%) in 7 months, with a lack of supply the touted driving factor. Still, prices were -3.2% Y/Y, slowing from the -4.5% seen in September.