SONIA Futures A Little Firmer

The uptick from yesterday’s worst levels in wider core global FI markets has a dovish feedthrough into SONIA, leaving futures flat to +5.0, as the late reds and greens lead the move higher.

• BoE-dated OIS softens by 0.5-2.5bp, showing ~86bp of cuts for '24.
• A reminder that even though some snips of BoE chief economist Pill’s late Monday address read dovishly (supply side constraints limit GDP growth, no expectations for a meaningful pick-up in economic activity, while noting that interest rates would be at a restrictive level even if cuts took place) he stressed that he is not yet confident enough re: the inflationary outlook to be comfortable with cutting rates. He described any futures rate cuts as a “reward” for lowering inflation. All in, he sounded less hawkish than he did on Friday, noting that the outlook for monetary policy has “shifted,” albeit alongside flagging some worry for upside re: inflation.
• BRC like-for-like sales data was a touch firmer-than-expected, but the Y/Y print still registered the lowest level seen since ’22.
• The BoE’s quarterly APF report headlines a very slim local release docket on Tuesday. That shouldn’t be a needle mover. Elsewhere, the DMO will come to market in the long end of the gilt curve.