SONIA Steady, Fiscal Speculation Continues To Dominate

SONIA futures are -0.5 to +2.5 through the blues, twist flattening.

• Core global bond futures are a little above levels printed during Monday’s SONIA settlement window.
• Asia-Pac news flow had little impact on wider core global FI markets.
• BoE-dated OIS pricing is little changed, with ~58.5bp of cuts showing for ’24.
• The latest round of UK fiscal speculation has focused on the potential for a 2% cut to the basic rate of income tax, with familiar financing ideas flagged once again.
• This wasn’t a new idea, but would represent slightly looser fiscal settings than were envisaged just one week ago.
• That would point to the need for higher for longer BoE interest rates.
• Elsewhere. BRC like-for-like sales data was softer than expected.
• Barclaycard spending data was also soft.
• Both survey providers pointed to the weather as a headwind re: shop footfall, along with well-known headwinds for consumers.
• Final services and composite PMI data headlines the UK schedule today, while gilts will have to digest the latest round of 2027 supply.