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Soft Retail Sales & Bid In Core FI Feeds Into UK STIR Markets, Bailey Comments Also Eyed

STIR

SONIA futures move higher in pre-gilt trade, with softer than expected domestic retail sales data providing a fresh bid.

  • Elsewhere, comments from BoE Governor Bailey reiterated expectations for a marked fall in inflation, while he suggested that the most recent run of inflation data didn’t provide a meaningful surprise (likely aiding the bid as the release helped terminal policy rate pricing tick higher on Wednesday) and provided continued warning over levels of pay growth that are too high to achieve the Bank’s inflation target.
  • Also note that the bid in wider core global FI markets is lending some support to the strip.
  • SONIA futures last show 1.0-7.5bp richer through the blues, with the reds & greens outperforming.
  • BoE-dated OIS slips by 1.5-5.5bp across the liquid contracts.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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