UK STIRs Adjust To Firmer Than Expected U.S. UoM Inflation Exp.

Fresh weakness across the SONIA strip on the back of the unexpected uptick in U.S. UoM survey inflation expectation components sees most of the reds and all of the greens through previous session lows, before the space stabilises a little. The blues failed to break existing session lows.

• Contracts through the blues last show +0.5bp to -9.5bp, with the greens under the most pressure when compared to yesterday’s settlement levels.
• BoE-dated OIS is little changed to ~6.5bp firmer on the day through the ’24 contracts, also off hawkish session extremes.
• There hasn’t been much to note when it comes to domestic drivers, leaving wider core global FI swings at the fore.
• Terminal policy rate pricing now sits ~6.5bp above prevailing levels, while the OIS strip now longer fully prices a full 25bp cut come the end of the Aug '24 MPC (just).
• Next week’s domestic data highlights include the monthly CPI and labour market report readings, as well as retail sales data. We will also receive a raft of BoE speak from across the hawk-dove spectrum.