SONIA Rallies Alongside Bonds, Just Under 35bp Of ’24 BoE Cuts Priced

The broader rally in core global FI markets (largely driven by strong reception of the latest 10-Year Tsy auction) helps underpin SONIA futures early today, with contracts flat to +3.5 through the blues.

• BoE-dated OIS shows ~34bp of ’24 cuts vs. ~33bp late yesterday.
• Recent ranges remain intact in the UK short end.
• There has been a tick away from early session highs.
• The incrementally firmer-than-expected UK monthly GDP reading had little tangible impact at the open, but may be helping limit the rally.
• We noted that there will be little policy impact from the data, with next week's CPI print much more important for the BoE.
• Long end I/L supply presents the only point of note on the UK calendar during market hours today.
• PM Sunak & Labour leader Starmer will participate in their latest debate from 19:00 London.
• Broader macro focus is set to fall on the U.S. CPI release and FOMC decision.