SONIA Biased Softer, Volumes Light

SONIA futures are flat to -3.5, with the previously flagged, modest run of early London cheapening in Tsys & Bunds applying some pressure in pre-gilt open trade (adding to some contained cheapening pressure seen into Tuesday’s close). Volumes are very light.

• BoE-dated OIS is little changed through ’24 contracts. ~145bp of cuts are showing through ’24, with ~24bp of cuts priced through the May ’24 MPC.
• Local news flow has been relatively light. Lower tier local data released overnight saw the Institute of Directors' economic confidence index fall to -28 from -21. The director of policy at the IoD suggested that “an early cut in interest rates would be justified in terms of helping to kick-start business confidence.”
• The local data docket is empty today.