PMI Pushes Market Pricing Of First BoE Cut Back To Sep '24

BoE-dated OIS and SONIA saw a hawkish adjustment on the back of the previously covered PMI data, with services inflation and labour market details set to create some angst within the MPC.

• SONIA futures sit +0.25 to -13.5 through the blues, off session lows, with the reds and greens leading the weakness.
• BoE-dated OIS is 1-12bp firmer through the '24 contracts, as the move away from last week’s dovish extremes extends further.
• The inflationary impulses from already delivered and potential pipeline fiscal easing will also be factoring into market pricing re: the BoE, with terminal policy rate pricing ~8bp above prevailing effective SONIA levels.
• The continued adjustment from recent dovish extremes means that the first full 25bp cut is now not fully priced until September ‘24, after markets flirted with the idea of a May '24 cut last week. The strip now prices a little under 50bp of cumulative easing through ’24, after pricing over 85bp of cuts at one-point last week.