SONIA Futures Little Changed, 30bp Of ’24 BoE Cuts Priced

SONIA futures are essentially little changed through the blues, trading within 1bp of yesterday’s closing levels.

• BoE-dated OIS is also little changed, showing ~50/50 odds of a cut through the Sep MPC and ~30bp of easing through year end.
• Discussions generally remain centred on political matters, with fiscal matters and speculation surrounding Labour's policy plans at the fore there.
• Elsewhere, lower tier UK data (Lloyds’ business barometer & Nationwide house prices) were firmer than expected.
• Yesterday’s record short-term BoE repo allotment represented an extension of the recent trend and is getting plenty of attention as economists and strategists look to map out any potential impact on QT.
• A reminder that BoE Governor Bailey has previously suggested that the take up at those operations is “encouraging.”
• The recent round of RONIA/SONIA spread widening has reversed, placating any worry surrounding repo/funding strains (for now), with the funding acquired via the STR no doubt helping on that front.
• Domestic consumer credit and lending data is due later today, although spill over from Eurozone CPI & U.S. PCE are set to dominate.