Wider FI Bid Supports SONIA Futures, Biases BoE Pricing Dovishly, Bailey Reiterates Stance

SONIA futures look to the continued bid in core global FI markets since yesterday’s close, extending on their post-Waller rally at the open. That leaves contracts flat to 7.5bp firmer at typing, a little shy of opening highs. The reds & greens lead the bid.

• BoE-dated OIS is flat to 5.5bp softer through ’24 MPC meetings, although contracts are still off recent dovish extremes. Exact pricing levels can be seen in the table below.
• Familiar soundbites from BoE Governor Bailey do the rounds via an interview with Daily Focus.
• Some key snips are outlined below:
• “We’ve got to get on and bring inflation down to our target of 2%. That is the best thing we can do for growth in the economy – and we will do it.”
• ““Food price inflation still has some way to come down but on energy inflation we’ve probably seen most of that for now.”
• “But I’m afraid we are not going to have another month of reduction (in inflation) like last month.”
• “We are not in a place now where we can discuss cutting interest rates – that is not happening. We need to see how the final part of the journey down to 2% inflation plays out; we have not seen enough of that journey yet to be confident.”
• Credit and money supply data headline a limited domestic data docket today, with further comments from Bailey and an appearance by outgoing head of the BoE’s markets division Hauser also due (Hauser is unlikely to have much market/any relevance given the setting).