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Retail Sales Supports SONIA Futures, Aids Dovish BoE Repricing

STIR

SONIA futures are flat to 5bp firmer through the blues, with the back end of the reds and front end of the greens leading the move. Contracts are just off early session bests in the main.

  • The soft domestic retail sales data flagged earlier provides the early London impetus, and comes in the wake of the latest round of UK & U.S. CPI, as well as the latest domestic private sector ex-bonus wage measure.
  • The data does enough to allow the June BoE-dated OIS contract to more than fully discount a 25bp cut, while the BoE-dated OIS strip prices a little over 80bp of cumulative cuts through calendar ’24 as a result. ’24 pricing on the whole has moved through previous week-to-date dovish extremes.
  • BoE hawk Mann highlighted that low productivity limits the potential for UK growth after the close on Thursday, but she didn’t provide much more in the way of meaningful commentary.
  • BoE’s Greene & Ramsden will appear again today after both spoke yesterday.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Dec-235.210+2.3
Feb-245.211+2.4
Mar-245.150-3.7
May-245.040-14.6
Jun-244.928-25.9
Aug-244.784-40.3
Sep-244.640-54.7
Nov-244.489-69.8
Dec-244.366-82.1
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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