SONIA Futures Rally In Wake Of Weak Retail Sales, A Little Under 35bp Of '24 Cuts Priced

SONIA futures are flat to +5.0, supported by much weaker than expected domestic retail sales data (including negative revisions).

• Still, the space has faded from initial highs, with the data doing little to alter the near 0 odds of a cut come the end of the June MPC (based on market pricing).
• This week’s CPI and the calling of a July 4 election have helped unwind effectively all of the easing that was priced for June.
• A reminder that a June cut was more or less 50% discounted heading into the latest round of UK CPI data.
• ~33.5bp of ’24 cuts are priced vs. a little over 50bp ahead of April’s CPI data.
• Elsewhere, the fall in the energy price cap generally matched a closely watched estimate provided by a market watcher in that space.
• The UK calendar is slim today, with London participants eying the long weekend (SONIA and gilt markets will be closed on Monday).