STIR: 90% Odds Of Dec BoE Cut Priced
GBP STIRs little changed vs. closing levels after the initial dovish impulse seen in the wake of yesterday’s Budget faded a little.
- As a reminder, despite the fiscal tightening delivered in yesterday’s Budget being more backloaded than envisaged, we don’t see anything that prohibits a December rate cut from the BoE.
- Beyond there, the state of the labour market and speed of the deflationary process will come under scrutiny when it comes to anticipating the pace of any additional BoE easing.
- BoE-dated OIS prices ~90% odds of a Dec cut, 50bp of easing is more or less fully priced through the April decision.
- SONIA futures flat to +1.5. The SONIA-implied terminal rate hasn’t been able to consolidate moves below 3.30% (3.285% provided the fresh year-to-date extreme yesterday), which has helped cap the rally seen over the past 24 hours.
- Late Wednesday SONIA option flow was mixed, with both upside and downside exposure sought.
- Ongoing fallout from the Budget will be monitored today.
- Elsewhere, comments from BoE’s Greene (who voted to leave rates unchanged earlier this month) are due at 16:30 London. We don’t expect Greene to indicate support for a cut at the December meeting (the topic of her address is “balancing risks”).
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Dec-25 | 3.745 | -22.4 |
Feb-26 | 3.678 | -29.1 |
Mar-26 | 3.587 | -38.2 |
Apr-26 | 3.480 | -48.9 |
Jun-26 | 3.428 | -54.2 |
Jul-26 | 3.362 | -60.7 |
Sep-26 | 3.345 | -62.4 |
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GILTS: Opening Calls
Gilt Opening Calls, 93.65/93.77.
EQUITIES: EU Cash Opening Calls
Estox 50: -0.21%, Dax: -0.11%, CAC: -0.23%, FTSE +0.30%, SMI -0.29%.
WTI TECHS: (Z5) Has Cleared The 50-Day EMA
- RES 4: $71.47 - High Jun 23 and a key medium-term resistance
- RES 3: $67.68 - High Jul 30
- RES 2: $65.77/68.43 - High Sep 26 and key resistance
- RES 1: $62.59 - High Oct 24
- PRICE: $61.19 @ 07:26 GMT Oct 28
- SUP 1: $59.64/55.96 - Low Oct 23 / 20
- SUP 2: $54.85 - Low May 5
- SUP 3: $54.16 - Low Apr 9 and a key support
- SUP 4: $53.23 - 1.764 proj of the Jul 30 - Aug 13 - Sep 26 price swing
The latest recovery in WTI futures appears corrective for now, however, note that price has traded through resistance at the 50-day EMA, at $61.14. The breach of this average signals scope for a stronger recovery . A resistance at $62.34, the Oct 8 high, has been pierced. A clear break of it would expose key resistance at $65.77, the Sep 26 high. Key support and the bear trigger has been defined at $55.96, the Low Oct 20.
