Up on the open; SONIA still pricing a lot

STIR futures higher across the board this morning with SONIA futures the biggest movers again. Risk-off sentiment from the report of Ukrainian military action overnight the biggest driver (with both the Eurodollar and Euribor strips off their overnight highs). No further hawkish impetusus from the Fed to a lesser extent behind the moves higher this morning too.

• In SONIA to us, it still looks as though 143bp priced by the end of the year is too much. And the Reds in particular are still vulnerable to moving higher, despite already moving up to 6.5 ticks higher today. In terms of nearer-term moves, we are now down to 37.5bp being priced for the March meeting (i.e. a 50% probability of a 50bp hike with 25bp fully priced) for the first time since last Thursday. The strip is still pricing 126bp by September (i.e. an average one 25bp hike per meeting).
• The Euribor strip is back to pretty much flat to the close yesterday after moving higher overnight. A 25bp hike is not fully priced until October now (was September at this time yesterday) with 47.3bp priced by year end (Deposit Rate now not quite fully priced to return to 0% this year).
• The Eurodollar strip is up around 1.5 ticks across the curve. This is around 2 ticks lower than the spike after the FOMC Minutes were released, byt the Dec-22 contract is down around 7 ticks from the overnight highs on the Russian news.