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SONIA Prices Just Over 40bp Of '24 Cuts Ahead Of BoE, Bank Reaction To Services CPI Eyed

STIR
HomepageBank Of England (BOE) Market NewsBulletMarketsFixed Income BulletsForeign Exchange Bullets

GBP STIR markets are little changed ahead of today’s BoE decision.

  • BoE-dated OIS shows ~41.5bp of cuts through year end.
  • The first 25bp move is not fully discounted until the end of the Nov meeting, with just under 70% odds of a cut through the end of the Sep MPC currently showing.
  • SONIA futures are flat to -1.0 through the blues.
  • We believe that yesterday’s CPI data cements an unchanged 7-2 vote at today’s MPC decision, with rates set to be left unchanged.
  • Yesterday’s services CPI reading will present the major point of worry for the MPC, after it topped BoE and wider sell-side expectations.
  • We don’t think the data will provide a meaningful change to the BoE’s guidance/ overarching view, but that outcome cannot be completely ruled out.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Jun-245.210+1.0
Aug-245.129-7.1
Sep-245.027-17.3
Nov-244.882-31.8
Dec-244.783-41.7
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GBP STIR markets are little changed ahead of today’s BoE decision.

  • BoE-dated OIS shows ~41.5bp of cuts through year end.
  • The first 25bp move is not fully discounted until the end of the Nov meeting, with just under 70% odds of a cut through the end of the Sep MPC currently showing.
  • SONIA futures are flat to -1.0 through the blues.
  • We believe that yesterday’s CPI data cements an unchanged 7-2 vote at today’s MPC decision, with rates set to be left unchanged.
  • Yesterday’s services CPI reading will present the major point of worry for the MPC, after it topped BoE and wider sell-side expectations.
  • We don’t think the data will provide a meaningful change to the BoE’s guidance/ overarching view, but that outcome cannot be completely ruled out.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Jun-245.210+1.0
Aug-245.129-7.1
Sep-245.027-17.3
Nov-244.882-31.8
Dec-244.783-41.7