STIR: 11bp Of BoE Easing Priced Through Year-End, Risk-Off Drives Dovish Move
GBP STIRs see dovish adjustments vs. settlement levels after U.S. regional bank worry triggered wider risk-off moves on Thursday.
- Core global FI markets have consolidated the bulk of their Thursday/Asia-Pac session rally.
- SONIA futures flat to +5.5.
- SFIZ6 gets within 0.5 of its early August highs, extending the recovery from Sep lows to ~25bp.
- BoE-dated OIS now prices 11bp of cuts through year-end, extending the dovish move from the ~5bp area that became the norm in recent weeks.
- The next 25bp move is fully discounted through the end of the March MPC.
- Liquid BoE contracts are flat to 2bp more dovish vs. closing levels.
- Fiscal headlines still dominate in the UK, but the short end is trading off swings in wider risk sentiment.
- BoE’s Breeden, Pill & Greene are all set to speak today, but all have made addresses in recent days/weeks, with their views relatively well-defined (Pill and Greene at the hawkish end of the spectrum, while Breeden seemingly isn't ruling out a Q4 cut vote).
- Saturday will see Governor Bailey provide the final scheduled MPC appearance ahead of the November MPC.
- Next week’s CPI data provides the next major highlight on the UK calendar.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Nov-25 | 3.938 | -2.9 |
Dec-25 | 3.858 | -11.0 |
Feb-26 | 3.708 | -25.9 |
Mar-26 | 3.649 | -31.8 |
Apr-26 | 3.545 | -42.2 |
Jun-26 | 3.514 | -45.4 |
Jul-26 | 3.454 | -51.3 |
Sep-26 | 3.433 | -53.4 |
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Historical bullets
GILTS: Opening calls
- Gilt calls, 91.45/91.50.
These DO NOT take the CPI into account, given that Sonia is a tick up, small upside risk, but should be close.
USDCAD TECHS: Strong Sell-Off Exposes Support
- RES 4: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg
- RES 3: 1.3925 High Aug 22 and the bull trigger
- RES 2: 1.3890 High Sep 11
- RES 1: 1.3803 20-day EMA
- PRICE: 1.3751 @ 07:56 BST Sep 17
- SUP 1: 1.3727 Low Aug 29 and a bear trigger
- SUP 2: 1.3709 61.8% retracement of the Jul 23 - Aug 22 bull cycle
- SUP 3: 1.3658 76.4% retracement of the Jul 23 - Aug 22 bull cycle
- SUP 4: 1.3637 Low Jul 25
A sharp sell-off in USDCAD this week has resulted in a break of the 20-and-50-day EMAs. This undermines a recent bullish theme and a continuation lower would expose key short-term support at 1.3727, the Aug 27 low. A break of this level would strengthen a bearish threat. For bulls, resistance levels to watch are; 1.3890, the Sep 11 high, and 1.3925, the Aug 22 high and bull trigger.
US TSY OPTIONS: TYX5 112.50 Puts Lifted
TYX5 112.50 puts paper paid 0-21 on 4K.
