SONIA Sees Minor Dovish Moves, Comments From BoE’s Greene Eyed

The late NY/Asia-Pac uptick in core global FI markets filters into SONIA.

• Note that both Bunds and Tsys are back from best levels, after block flow countered some of the Asia-Pac reaction to yesterday’s U.S. data.
• SONIA futures last flat to +3.0.
• ’24 BoE-dated OIS contracts are 0.5-1.0bp softer.
• ~13.5bp of cuts are priced through the June MPC, with ~61bp of cuts showing through year end.
• BoE MPC member Greene will speak today (12:00 London, with a slideshow released at that time).
• We view this as the most significant BoE address of the week. The speech is entitled “The current state of Britain’s labour market.”
• We think that Greene and Haskel remain the two most hawkish members of the MPC (we suspect Mann is slightly less hawkish based on her most recent comments).
• Any signal that Greene sees less risk of inflation persistence would likely be deemed significant.
• Her vote is unlikely to be needed to reach quorum to cut rates but if she did indicate that she was leaning in a more dovish direction, this would likely see the market increase the probability of near-term cuts.
• A continuation of her hawkish stance would probably see less of a market reaction, although the recent dovish repricing gives a little more room for such an adjustment.