SONIA Futures Firm On Latest Bailey Comments

GBP STIR markets rally early today, with press interviews with BoE Governor Bailey continuing to provide a dovish tilt.

• An FT story covering an interview with Bailey noted that “the Governor has signalled markets are right to expect more than one interest rate cut this year, saying he is increasingly confident inflation is heading towards target.”
• “Bailey told the Financial Times that rate cuts were “in play” at future meetings of the BoE Monetary Policy Committee amid signs that tighter policy had quelled the risk of a wage-price spiral.”
• SONIA futures are 0.5-4.5bp higher, a little off early session highs.
• Some of the whites have breached their post-BoE highs.
• BoE-dated OIS show a little over 80bp of ’24 cuts.
• Over 80% odds of the first cut coming by then end of the June MPC are priced post-Bailey.
• Domestic retail sales data has had little impact. The data wasn’t as weak as feared.
• GfK data revealed that UK consumers are increasingly upbeat about their own financial positions, even as overall confidence levels remain unchanged,