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STIR
Terminal BoE policy rate pricing on the BoE-dated OIS strip continued to firm this morning, showing above 6.25% before easing back to last print a touch below that level, with the post mini-Budget closing highs coming into focus. ~45bp of tightening is priced for the August MPC.
- Domestically, retail sales data beat expectations, although the data was subjected to negative revisions, while the flash PMI readings were softer than expected.
- Early trade saw BoE-dated OIS pressured on the back of the softer European PMIs, before the details of the UK release, which noted “while falling backlogs of work suggest this hiring trend could also fade in the coming months as the economy weakens, for now it is generating higher wage growth, in turn feeding through to still-elevated inflation pressures in the service sector. As such, the survey’s price gauges point to consumer price inflation remaining well above the Bank of England's target into 2024, which will add to the case for further interest rate hikes.”
- Such wage pressure will be a continued worry for the Bank, given Governor Bailey’s (and the MPC’s) well-documented focus on that area, which allowed BoE pricing to firm through yesterday’s extremes.
| BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| Aug-23 | 5.384 | +45.6 |
| Sep-23 | 5.779 | +85.1 |
| Nov-23 | 6.036 | +110.9 |
| Dec-23 | 6.143 | +121.6 |
| Feb-24 | 6.161 | +123.3 |
| Mar-24 | 6.112 | +118.5 |
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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