STIR: 90% Odds Of Dec BoE Cut Priced, Support In SFIZ6 & SFIZ7 Holds
Spillover from the FOMC decision provides a dovish impulse for the GBP short end this morning.
- BoE-dated OIS is 0.5-3.5bp more dovish across liquid contracts, once again pricing 90% odds of a cut later this month, with ~58.5bp of cuts from current levels priced for the remainder of the cycle.
- SONIA futures flat to +4.5, with SFIZ6 & Z7 extending bounces from medium-term uptrend support drawn off the Jan lows (flagged yesterday).
- Markets have been unwilling to price less than 50bp of easing from current levels, limiting hawkish moves over the last 24 hours.
- SONIA-implied terminal rate pricing back to ~3.40% after operating in a 3.285-3.475% range in recent weeks.
- This morning will see BoE Governor Bailey take part in a pre-recorded fireside chat with Chris Giles at the FT Global Boardroom event. This is likely to be the main event of the week, given that Bailey is the swing voter on the MPC. We are not sure how forthright he will be with his views in this event, so he may not give much more colour than we already have (the topic of Financial Stability may also limit room for direct monetary policy-related comments). Still, the market will watching closely to see whether he continues to reference data ahead of the December meeting, or if he is more vague.
- Bailey will also be giving evidence ahead of the Covid-19 inquiry on Thursday (starting at 10:00 and he's scheduled for both the morning and afternoon sessions - but don't expect anything market moving from this appearance).
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Dec-25 | 3.749 | -22.6 |
Feb-26 | 3.688 | -28.7 |
Mar-26 | 3.609 | -36.6 |
Apr-26 | 3.510 | -46.5 |
Jun-26 | 3.467 | -50.8 |
Jul-26 | 3.411 | -56.4 |
Sep-26 | 3.400 | -57.5 |
Nov-26 | 3.388 | -58.7 |
Dec-26 | 3.389 | -58.6 |
Feb-27 | 3.400 | -57.5 |
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STIR: Soft Labour Market Data Drives Dovish GBP Rates Move, Dec Cut 80% Priced
Dovish moves in GBP STIRs in the wake of the soft labour market data.
- Softer-than-expected private sector wage metrics of particular note, with our macro team categorising the data as soft across the board.
- BoE-dated OIS 3-7bp more dovish across liquid contracts. 20.5bp of easing priced for December, 31bp through February and 39bp through March.
- SONIA futures little changed to +7.0.
- SFIZ6 trades through its October high but fails to test year-to-date highs (96.700).
- SFIZ5/Z6 1.0 off October lows.
- GBP 1y1y within 2bp of October lows and 5bp of year-to-date lows.
- A reminder that BoE Governor Bailey is viewed as the key swing voter after the 5-4 vote to leave rates unchanged earlier this month (Bailey voted for no change).
- This morning’s data increases the odds of him voting for a cut in December, particularly after the communication that accompanied the November decision lowered the bar for such a move.
- Still, we've got one more labour market print and 2 CPI releases before the next decision.
- With the other 8 MPC members having entrenched views and what they are watching clearly set out in the individual view paragraphs in the meeting minutes, market volatility around non-Bailey speeches is likely to be much reduced
- On that note, hawkish dissenter Greene will speak this morning (08:30).
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Dec-25 | 3.764 | -20.6 |
Feb-26 | 3.662 | -30.8 |
Mar-26 | 3.581 | -38.9 |
Apr-26 | 3.473 | -49.7 |
Jun-26 | 3.427 | -54.3 |
Jul-26 | 3.373 | -59.7 |
Sep-26 | 3.350 | -62.0 |
EQUITY TECHS: E-MINI S&P: (Z5) Bullish Recovery
- RES 4: 7000.00 Psychological round number
- RES 3: 6993.12 3.500 proj of the Aug 20 - 28 - Sep 2 price swing
- RES 2: 6974.04 3.382 proj of the Aug 20 - 28 - Sep 2 price swing
- RES 1: 6867.00/6953.75 Intraday high / High Oct 30 and bull trigger
- PRICE: 6850.50 @ 07:23 GMT Nov 11
- SUP 1: 6655.70 Low Nov 7 and key short-term support
- SUP 2: 6571.25 Low Oct 17
- SUP 3: 6540.25 Low Oct 10 and a key support
- SUP 4: 6476.62 23.6% retracement of the Apr 7 - Oct 30 bull cycle
The trend condition in S&P E-Minis remains bullish and the pullback since the Oct 30 high appears corrective. The contract has managed to find support below the 50-day EMA, currently at 6716.03 and a key support. Friday’s activity also highlights a potential reversal signal - a bullish doji candle. This defines key support at 6655.50, the Oct 7 low. A continuation higher would signal the end of a correction and open 6953.75, Oct 30 high and bull trigger.
WTI TECHS: (Z5) Bullish Corrective Cycle
- 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: $59.81 @ 07:19 GMT Nov 11
- SUP 1: $58.83/55.96 - Low Nov 6 / Low Oct 20 and bear trigger
- 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
Recent weakness in WTI futures appears to be a flag formation - a bullish continuation pattern. This suggests that an upward corrective cycle remains intact for now. Price has recently traded through the 50-day EMA, at $60.84, signalling scope for a stronger recovery. Note too that resistance at $62.34, the Oct 8 high, has been pierced. A clear move through it would expose key resistance at $65.77, Sep 26 high. The bear trigger is $55.96, the Oct 20 low.
