May 09, 2024 12:59 GMT
/STIR: GBP STIRs Show Near 50/50 Odds Of June Cut
GILTS
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Spill over from the U.S. weekly jobless claims data pushes gilt futures back towards session highs before the move falters.
- The contract remains rangebound, while only 2- & 5-Year yields managed to register fresh multi-week lows post-BoE.
- The BoE outcome reads a little dovish all told, with the vote split, inflation projections and Bailey’s choice to point to the potential for a swifter cutting cycle than markets currently discount providing the main points of discussion.
- BoE-dated OIS now prices 13bp of easing through the June meeting (just over 50/50 odds of a 25bp cut), providing scope for plenty of opportunities around UK data releases.
- This is particularly true as Bailey reaffirmed that the Bank holds no preconceptions about the policy rate path as he stressed the importance of the incoming data.
- ~59bp of cuts are priced through ’24 vs. closer to ~54bp pre-decision.
| BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| May-24 | 5.210 | +1.0 |
| Jun-24 | 5.071 | -12.9 |
| Aug-24 | 4.936 | -26.4 |
| Sep-24 | 4.840 | -36.0 |
| Nov-24 | 4.709 | -49.2 |
| Dec-24 | 4.610 | -59.1 |
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