SONIA Sees Dovish Moves Post-Fed, Close Call BoE Decision Set To Dominate Today

SONIA futures mostly rally following the Fed decision, last -0.5 to +6.0.

• Some last minute set up for a potential BoE rate cut may also be factoring in.
• BoE-dated OIS shows ~15bp of cuts for today’s decision, ~26bp of cuts through September and ~57bp of easing through year end.
• Yesterday’s dovish move saw SFIZ5 break above its April 10 high, with bulls testing the April 1 high in that contract early today.
• We have characterised today's rate decision as 50/50 for some time due to a number of factors – a lack of communication from the MPC (due to the election and the pre-meeting blackout periods), a changing composition of the MPC (with Lombardelli replacing Broadbent) and some inconclusive data.
• Note that the BoE Governor Bailey's press conference will represent his round of public comments since the time the election was called.
• BoE chief economist Pill will then conduct a virtual Q&A session covering the decision (17:00 London).
• Our full preview of the BoE decision can be found here.