STIR: BoE Terminal Rate Pricing Steady Around 3.30%
The GBP front end has been subjected to modest hawkish adjustments today, but the bulk of the dovish move that followed yesterday’s soft labour market data has been consolidated (our full write up covering the data release is here)
- BoE-dated OIS is flat to 1bp less dovish vs. closing levels, showing 20.5bp of easing for December, 31.5bp through February, 40.5bp through March and 51.5bp through April.
- SONIA futures flat to -2.5. SFIZ6 registered an incremental fresh year-to-date high yesterday, with SONIA-implied terminal rate pricing last ~3.30%.
- Next week’s CPI data presents the next major scheduled UK risk event.
- We have already noted that in line releases in the next 2 inflation reports would likely be enough to push Governor Bailey to vote for a rate cut in December, cementing a cut (assuming the weakness in the labour market data isn’t revised away and that the views of the other MPC members remain entrenched).
- In light of yesterday’s data ING write “going forward, we think markets should become more confident about 3.25% as the terminal rate, but the budget announcement on 26 November does add some uncertainty to the mix. A fiscally prudent approach would involve tax hikes and spending cuts, which would support a more dovish Bank of England stance. But our risk premium estimates suggest this scenario is broadly priced in already. If, on the other hand, Chancellor Reeves fails to win markets' confidence in the UK’s fiscal discipline, then we could very well see the curve move higher again”.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Dec-25 | 3.765 | -20.4 |
Feb-26 | 3.657 | -31.3 |
Mar-26 | 3.565 | -40.4 |
Apr-26 | 3.454 | -51.6 |
Jun-26 | 3.406 | -56.4 |
Jul-26 | 3.355 | -61.5 |
Sep-26 | 3.336 | -63.4 |
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SECURITY: Trump To Meet Zelenskyy At White House On Thursday - FT
US President Donald Trump will meet Ukrainian President Volodymyr Zelenskyy at the White House on Thursday, per reporting from the Financial Times. The meeting comes as the Trump administration's pivot toward Kyiv has yet to be backed with new penalties on Moscow, and Trump weighs supplying Ukraine with long-range missiles.
- News of the meeting comes after the pair spoke on Saturday, with Zelenskyy urging Trump to use the momentum from the Gaza peace deal to take a more assertive role in a Ukraine ceasefire.
- Zelenskyy wrote on X, “I congratulated [Trump] on his success and the Middle East deal... If a war can be stopped in one region, then surely other wars can be stopped as well—including the Russian war.”
- Trump told reporters yesterday he is considering arming Ukraine with long-range Tomahawk missiles that would allow strikes deeper into Russia, but may first talk to Russian President Vladimir Putin about it in a bid to end the war. Trump, “If the war is not settled, then we may very well do it. We may not, but we may do it.”
- Trump added more explicitly that he may use the threat of Tomahawks as leverage with Putin, “I might have to speak to Russia... Do they want to have Tomahawks going in their direction? I don’t think so. I think I might speak to Russia about that, in all fairness. I told that to President Zelenskyy, because Tomahawks are a new step of aggression. You understand that.”
SOFR OPTIONS: Dec'25 SOFR Put Tree
- +5,000 SFRZ5 96.12/96.25/96.31 put trees, 0.75 ref 96.36
OPTIONS: Expiries for Oct14 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.1450(E537mln), $1.1500(E848mln), $1.1600(E663mln), $1.1650(E636mln)
- USD/JPY: Y151.50($691mln), Y152.00($751mln)
- AUD/USD: $0.6500(A$1.0bln), $0.6580-00(A$1.2bln)
- USD/CAD: C$1.4000-10($598mln)
