SONIA A Touch Softer Pre-Gilt Open

Narrow, low volume pre-gilt trade sees SONIA futures 0.5-3.0bp softer through the blues, with a drift lower in core global FI futures weighing.

• Weekend comments saw BoE Governor Bailey note that the last mile in the fight against inflation will be the toughest, while stressing that the weak GDP growth outlook complicates BoE policy. He also noted that he is “puzzled” by the UK’s stubborn rate of pay growth.
• Meanwhile, BoE Deputy Governor Cunliffe supported the higher for longer narrative re: interest rates.
• Other news flow saw focus on well-documented headwinds surrounding the domestic housing market, while one survey revealed the potential for lower than usual seasonal Christmas purchases owing to inflation.
• BoE speak from Pill headlines the domestic docket today, with tier 1 domestic data due later in the week.