SONIA Futures Tick Lower Alongside Wider Core Global FI Markets

Spill over from the previously covered BoJ press conference has biased wider core global FI markets lower early on Tuesday. SONIA futures run flat to 3.5bp lower through the blues as a result, with the back end of the reds under the most pressure.

• Monday saw the release of the latest BoE survey from RTRS. The findings of the poll indicated that “it is a close call whether the Bank of England starts trimming borrowing costs next quarter or in July-September, with only a slim majority of economists expecting it to do so before July as inflation falls towards its target.”
• The BoE-dated OIS strip fully discounts the first 25bp through the end of the July '24 MPC, with slightly greater than even odds of such a move priced through the end of the May '24 MPC. ~105bp of cuts are seen through '24 on the whole.
• '24 BoE-dated OIS contracts are little changed to 2bp firmer on the day, owing to the move lower in wider core global FI markets.
• Local news flow has seen the latest round of monthly public finance data hit. The ONS noted that December saw a "stronger growth in central government tax receipts than we've seen in the most recent months." This at first glance seems to be a much lower borrowing number than had been expected - and those tax receipts are one of the drivers.
• Tomorrow's flash PMI readings provide the next domestic data highlight.