July 02, 2024 14:14 GMT
SONIA Trading Off Wider FI Cues, Multi-Week Ranges Intact
STIR
The early afternoon rally in core global FI saw a slight dovish extension in SONIA markets, before U.S. JOLTS data countered.
- The space doesn’t get anywhere near breaking recent multi-week ranges, given adjustments off post-BoE dovish extremes.
- BoE-dated OIS shows ~14bp of cuts for Aug and ~43bp through year end.
- SONIA futures are flat to +4.5.
- UK-centric discussions have generally focused on the size of the seemingly likely Labour majority and margin of error in the opinion polls, as participants look for a change in power in Westminster later this week.
- Relative cross-market vol. in gilts and GBP FX pairs remained contained.
- This points to a lack of worry surrounding a change in political power in the UK, at least at this stage.
- This comes after a volatile few years for UK policymaking, headlined by the COVID pandemic and Truss mini Budget, as well the initial adjustments to Brexit.
| BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| Aug-24 | 5.059 | -14.1 |
| Sep-24 | 4.997 | -20.3 |
| Nov-24 | 4.861 | -33.9 |
| Dec-24 | 4.773 | -42.8 |
| Feb-25 | 4.643 | -55.7 |
| Mar-25 | 4.559 | -64.1 |
| May-25 | 4.445 | -75.5 |
| Jun-25 | 4.358 | -84.2 |
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