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Wage Data Weighs On SONIA Futures, Less Than 50bp Of '24 Cuts Priced

STIR
HomepageBank Of England (BOE) Market NewsBulletMarketsFixed Income BulletsForeign Exchange Bullets

Firmer-than-expected UK wage data weighs on SONIA futures, last flat to -4.5 through the blues.

  • As suggested ahead of the release, the wage data has dominated the softer-than-expected employment figures, at least when it comes to markets.
  • Core global bond markets also move lower on the data, with Bund futures back to levels seen around yesterday’s SONIA settlement window.
  • BoE-dated OIS now shows ~47bp of ’24 cuts vs. a little over 50bp at yesterday’s close, with the first 25p cut still fully discounted come the end of the Sep ’24 MPC.
  • Today’s data further pushes back against the idea of imminent BoE cuts, although the June and particularly August MPC meetings remain very much in play re: a first cut.
  • On that note, incoming BoE Deputy Governor Lombardelli is set to appear in front of the TSC later today, while BoE Governor Bailey will speak at 18:00 London.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
May-245.183-1.5
Jun-245.118-8.0
Aug-245.007-19.1
Sep-244.933-26.5
Nov-244.816-38.2
Dec-244.731-46.7
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Firmer-than-expected UK wage data weighs on SONIA futures, last flat to -4.5 through the blues.

  • As suggested ahead of the release, the wage data has dominated the softer-than-expected employment figures, at least when it comes to markets.
  • Core global bond markets also move lower on the data, with Bund futures back to levels seen around yesterday’s SONIA settlement window.
  • BoE-dated OIS now shows ~47bp of ’24 cuts vs. a little over 50bp at yesterday’s close, with the first 25p cut still fully discounted come the end of the Sep ’24 MPC.
  • Today’s data further pushes back against the idea of imminent BoE cuts, although the June and particularly August MPC meetings remain very much in play re: a first cut.
  • On that note, incoming BoE Deputy Governor Lombardelli is set to appear in front of the TSC later today, while BoE Governor Bailey will speak at 18:00 London.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
May-245.183-1.5
Jun-245.118-8.0
Aug-245.007-19.1
Sep-244.933-26.5
Nov-244.816-38.2
Dec-244.731-46.7