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STIR: GBP Markets Still Price Around 75bp Of BoE Cuts Through '25, Pill Due Soon

STIR
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GBP STIRs generally tracking the long end, off hawkish session extremes, sticking to narrow ranges.

  • SONIA futures last flat to -3.0.
  • The SONIA/Euribor Dec ’25 (Z5) spread holds above 210bp, 12bp off cycle closing highs.
  • Lack of hawkish domestic developments and spillover from recent contained dovish Fed repricing in the U.S. have helped that spread off early November highs.
  • BoE-dated OIS shows 2bp of cuts for December, 21bp of easing through February, 30bp of cuts through March, 52bp of easing through June and 74bp of cuts through December ’25. Contracts little changed to ~1bp more hawkish on the day.
  • Comments from BoE chief economist Pill are due shortly (15:00 London).
  • Pill will testify in front of the Economic Affairs Committee (EAC; the Lords' equivalent of the Treasury Select Committee), regarding "Economic Inactivity: Welfare and long-term sickness."
  • He had previously seen greater risks of the BoE's "case 3" (structural risks that inflation will be higher) than Bailey and Lombardelli - and dissented against a cut in August (but not in November).
  • His comments surrounding those risks will be closely watched.

BoE Meeting

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GBP STIRs generally tracking the long end, off hawkish session extremes, sticking to narrow ranges.

  • SONIA futures last flat to -3.0.
  • The SONIA/Euribor Dec ’25 (Z5) spread holds above 210bp, 12bp off cycle closing highs.
  • Lack of hawkish domestic developments and spillover from recent contained dovish Fed repricing in the U.S. have helped that spread off early November highs.
  • BoE-dated OIS shows 2bp of cuts for December, 21bp of easing through February, 30bp of cuts through March, 52bp of easing through June and 74bp of cuts through December ’25. Contracts little changed to ~1bp more hawkish on the day.
  • Comments from BoE chief economist Pill are due shortly (15:00 London).
  • Pill will testify in front of the Economic Affairs Committee (EAC; the Lords' equivalent of the Treasury Select Committee), regarding "Economic Inactivity: Welfare and long-term sickness."
  • He had previously seen greater risks of the BoE's "case 3" (structural risks that inflation will be higher) than Bailey and Lombardelli - and dissented against a cut in August (but not in November).
  • His comments surrounding those risks will be closely watched.

BoE Meeting

Keep reading...Show less