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Softening In Labour Market Surveys Sees Light Dovish Flows In BoE Pricing

STIR

Signs of a continued cooling labour market (per lower tier survey data) leaves BoE-dated OIS pricing ~69bp of ’24 cuts vs. ~66bp shortly after the open.

  • The first 25bp cut is once again fully discounted come the end of the Aug ’24 MPC.
  • SONIA futures are unchanged to +6.0.
  • UBS now expect the BoE’s first cut to come in August (from May prev.), while they now see 75bp of ’24 cuts (100 bp), which is close to market pricing.
  • Further out, they still see 175bp of rate cuts in ’25, looking for Bank policy rate to sit at 2.75% at the end of '25.
  • Key short term domestic risk events are today’s comments from BoE hawk Mann and tomorrow's UK labour market data.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Mar-245.200+1.2
May-245.166-2.2
Jun-245.071-11.7
Aug-244.922-26.6
Sep-244.787-40.1
Nov-244.624-56.4
Dec-244.496-69.3
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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