SONIA Futures Lower, Volumes Very Light

SONIA futures hold lower to start the new week, with core global bond futures still sitting comfortably below levels seen around the time of Friday’s SONIA settlement window.

• Futures run 0.5-7.0 lower through the blues as a result, although volumes are very light in pre-gilt trade.
• BoE-dated OIS is little changed to ~3bp firmer vs. Friday’s settlement. That leaves ~17.5bp of cuts priced through the May ’24 MPC and a cumulative ~122bp of cuts showing through ’24 on the whole, comfortably away from the dovish extremes seen in recent weeks.
• UK weekend headline flow was once again dominated by political speculation and posturing, with focus on potential general election timing.
• The latest REC/KPMG employment report noted that “recruitment intentions remained subdued as 2023 drew to a close.” KPMG suggested that the labour market “continues to be tight. While the data for December shows hiring activity for both permanent and temporary roles fell at a softer rate than the previous month, businesses are still making redundancies and pausing hiring due to a lacklustre economic outlook.” Seasonals (approaching the turn of the calendar year) also factored into the slowing in hiring.
• The UK docket is light to start the week.