STIR: BoE Terminal Rate Pricing Holds Above 3.40% After Recent Hawkish Swing
GBP STIRs little changed this morning, with wider core global FI markets stabilising off yesterday’s/Asia lows.
- BoE-dated OIS pricing 22bp of easing for this month’s meeting, 28bp through February and 35bp through March.
- SONIA futures flat to -1.0.
- SFIZ5/Z6 & SFIH6/H7 hold onto the bulk of the recent steepening after well-defined support levels held in the spreads.
- Market-implied BoE terminal rate pricing has settled above 3.40% for now, after threatening a clean break below 3.30% in recent weeks.
- A reminder that Morgan Stanley have lifted their terminal rate forecast to 3.00%, as detailed in a recent bullet.
- Global cues have driven the hawkish repricing seen over the last week or so.
- Little of note on the UK calendar today, which will leave global cues at the fore.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Dec-25 | 3.756 | -21.8 |
Feb-26 | 3.694 | -28.0 |
Mar-26 | 3.623 | -35.1 |
Apr-26 | 3.531 | -44.3 |
Jun-26 | 3.490 | -48.4 |
Jul-26 | 3.437 | -53.7 |
Sep-26 | 3.425 | -54.9 |
Nov-26 | 3.411 | -56.3 |
Dec-26 | 3.414 | -56.0 |
Feb-27 | 3.425 | -54.9 |
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FOREX: Antipodeans & NOK Outperform, JPY Lags
The broader USD (BBDXY) operates in the bottom half of Friday’s range as equities rally.
- This comes after a group of Democratic Senators broke ranks and agreed a deal with the GOP re: ending the U.S. government shutdown. Official Senate passage and House approval of the legislation is still required.
- Some may perceive the deal to be USD-negative as it moves us closer to the resumption of U.S. data releases, which could increase odds of Fed easing.
- Risk-sensitive AUD & NZD outperform against this backdrop.
- AUD received further tailwinds from hawkish RBA comments.
- AUD/USD extends the recovery from month-to-date lows, last 0.6533. Immediate resistance of note at the 50-day EMA (0.6538), albeit with the bearish technical setup remaining intact at this stage.
- Elsewhere, the NOK benefits from the risk-positive backdrop and firmer-than-expected domestic CPI data detailed in recent bullets. We had already noted that a December cut from the Norges Bank seemed very unlikely at this stage, and the prospects of such a move are set to fall back even further in the wake of the data.
- EUR/NOK has extended the pullback from 11.80, potentially forming a double top pattern multi-week.
- JPY the underperformer, with USD/JPY back above 154.00. Technicals remain bullish USD/JPY, with the November 4 high and bull trigger located at 154.48.
- Comments from Fed’s Daly & Musalem, as well as BoE’s Lombardelli, headline a limited G10 calendar today.
EQUITY TECHS: E-MINI S&P: (Z5) Doji Reversal Candle
- 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: 6857.75/6953.75 High Nov 5 / High Oct 30 and the bull trigger
- PRICE: 6801.50 @ 07:27 GMT Nov 10
- 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 6710.28 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, the Oct 30 high and bull.
WTI TECHS: (Z5) Bullish Short-Term Price Pattern
- 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: $60.22 @ 07:19 GMT Nov 10
- 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 a bullish corrective cycle remains intact for now. Price has recently traded through the 50-day EMA, at $60.87, 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.
