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STIR: 35bp Of BoE Cuts Priced Through Year-End

STIR
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Hawkish adjustments in GBP STIRs continue after Powell stressed that the Fed planned to lower interest rates “over time” late on Monday.

  • BoE-dated OIS prices 23bp of cuts for Nov, 35bp of cuts through year-end and 115bp of cuts through June ’25.
  • A reminder that the strip priced ~43bp of cuts through year-end on Monday Sep 23, with the recent hawkish adjustment driven by spill over from Fed pricing and the BoE’s reluctance to firmly commit to follow up rate cuts.
  • SONIA futures little changed to -3.0.
  • Late Monday also saw MPC member Greene note that while a consumption-driven recovery could reignite inflation (with services prices already “worrisome”), further rate cuts are likely with prices “moving in the right direction.”
  • Elsewhere, the BRC-NielsenIQ release revealed a second consecutive Y/Y fall in shop prices.
  • Meanwhile, a survey of directors outlined the greatest degree of pessimism seen since former PM Truss’ mini-budget, with potential tax hikes and deeper workplace regulations weighing on sentiment.
  • Final manufacturing PMI data is due today but shouldn’t be too much of a market mover.

BoE Meeting

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Hawkish adjustments in GBP STIRs continue after Powell stressed that the Fed planned to lower interest rates “over time” late on Monday.

  • BoE-dated OIS prices 23bp of cuts for Nov, 35bp of cuts through year-end and 115bp of cuts through June ’25.
  • A reminder that the strip priced ~43bp of cuts through year-end on Monday Sep 23, with the recent hawkish adjustment driven by spill over from Fed pricing and the BoE’s reluctance to firmly commit to follow up rate cuts.
  • SONIA futures little changed to -3.0.
  • Late Monday also saw MPC member Greene note that while a consumption-driven recovery could reignite inflation (with services prices already “worrisome”), further rate cuts are likely with prices “moving in the right direction.”
  • Elsewhere, the BRC-NielsenIQ release revealed a second consecutive Y/Y fall in shop prices.
  • Meanwhile, a survey of directors outlined the greatest degree of pessimism seen since former PM Truss’ mini-budget, with potential tax hikes and deeper workplace regulations weighing on sentiment.
  • Final manufacturing PMI data is due today but shouldn’t be too much of a market mover.

BoE Meeting

Keep reading...Show less