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Reds up to 14.5 ticks higher since the BOE decision

SONIA
  • The market is focusing on the additional caveat to the forecast guidance adding the condition of "most members" to the existing guidance. This is in contrast to a change to the time contingency, which remains in the guidance. The full guidance now reads: "Most members of the Committee judged that some degree of further tightening in monetary policy might still be appropriate in the coming months."
  • This does suggest that probably more than one member thinks that rates won't need to be raised again. The key question here is how many? We are probably seeing a bigger move than if we had had two members vote for unchanged rates today.
  • Since the dcision, Reds have moved up to 14.5 ticks higher (up to 22.5 ticks higher on the day as a whole), with sligthly smaller moves in Green and Blues and a flattening of the curve in the Whites.
  • Markets now price around 28bp for June, 54bp cumulatively by August, 81bp by September, 101bp by November and 124bp by February. So the market is still expecting 25bp hikes in each meeting to November and then a further hike in either December or February 2023.

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  • The market is focusing on the additional caveat to the forecast guidance adding the condition of "most members" to the existing guidance. This is in contrast to a change to the time contingency, which remains in the guidance. The full guidance now reads: "Most members of the Committee judged that some degree of further tightening in monetary policy might still be appropriate in the coming months."
  • This does suggest that probably more than one member thinks that rates won't need to be raised again. The key question here is how many? We are probably seeing a bigger move than if we had had two members vote for unchanged rates today.
  • Since the dcision, Reds have moved up to 14.5 ticks higher (up to 22.5 ticks higher on the day as a whole), with sligthly smaller moves in Green and Blues and a flattening of the curve in the Whites.
  • Markets now price around 28bp for June, 54bp cumulatively by August, 81bp by September, 101bp by November and 124bp by February. So the market is still expecting 25bp hikes in each meeting to November and then a further hike in either December or February 2023.