STIR: Fresh Hawkish Move In GBP STIRs, 37bp Of BoE Cuts Priced Through Dec

A sharp hawkish move in GBP STIRs at the open, before contracts stabilise.

• While there wasn’t an overt headline driver, some have flagged commentary & analysis pointing to the risk of higher interest rates if the Labour government boosts borrowing alongside a widely expected fiscal rule tweak.
• Note that one of the referenced pieces comes from Treasury research published in late ’23.
• BoE-dated OIS is 1-9bp less dovish through November ’25, showing 21.5bp of cuts for November ‘24, 37bp of cuts through year-end and 92.5bp of cuts through June ’25.
• That compares to 22.5bp, 38bp and 98bp late Friday.
• SONIA futures last 0.5-7.5 lower, with some contracts 6.0 off session lows.
• Futures traded through their post-NFP lows hitting levels not seen since early August/July.
• The scope of the move seen over the past two sessions, coupled with early Monday volume, suggest that long liquidations probably factored into the move.
• The latest REC report on jobs pointed to continued loosening in the labour market but did little for GBP STIRs given the sharp hawkish repricing.
• Assessment of the move will likely dominate for the remainder of today,
• Friday’s monthly economic activity data headlines the UK calendar this week.