SONIA A Touch Softer To Start

Core global FI sits shy of Friday/early Asia-Pac highs, but in line to a touch above levels seen at the time of Monday’s SONIA settlement window. That leaves SONIA futures flat to -3.5 through the blues.

• BoE-dated OIS shows little changed to 3bp firmer to start. ~19bp of cuts are priced through the June ’24 MPC, with the first full 25bp cut more than discounted come the end of the August MPC. ~73bp of cuts are priced through ’24 on the whole, with the space working off dovish extremes seen in light of the cross-market feedthrough from Fed Chair Powell’s remarks on Friday.
• In terms of local news flow, weekend comments from PM Sunak produced a more explicit linkage between spending reduction and tax cuts.
• Known polling headwinds for the Conservatives/PM also got some airtime.
• Comments from BoE dove Dhingra headline the domestic docket today. She will speak at the 'Ending stagnation' conference later this morning (11:30 London).