EU COMMUNICATIONS: Canal+ (CANALP): Inaugural 5yr
(CANALP; NR) * IPT: Exp. EUR 500m ms+250a * FV: ms+200 (4.40%) * The leads released feedback yesterd...
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STIR: Implied Probability Of A November Cut At 25%, We See A Near-50/50 Decision
The implied probability of a November BOE cut has risen from less than 5% to around 25% over the past two weeks, following weaker-than-expected UK labour market and inflation data releases. While markets still lean in favour of a hold in November, we think it is almost a 50/50 decision between a hold and a cut.
- There remains around a 60% implied probability of a 25bp cut by December, with just under 60bps of easing priced through September 2026. While the curve is now more appropriately priced, in our view, than before the labour market/inflation releases, we still caution that it is questionable how much below 3.50% some MPC members will want to take the terminal rate.
- This week’s domestic data calendar is relatively light, with tier 2 survey (CBI distributed sales, BRC shop price) and credit data due. That will leave focus on fiscal headlines – see our earlier wrap of weekend news for more – and global developments. A reminder that the Fed and ECB meet this week, alongside a meeting between Trump and Xi
- The SONIA strip has lightly bear steepened alongside core FI curves, with futures -0.5 to -1.5 ticks through the blues.
| Meeting Date | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| Nov-25 | 3.911 | -5.9 |
| Dec-25 | 3.819 | -15.0 |
| Feb-26 | 3.663 | -30.6 |
| Mar-26 | 3.607 | -36.2 |
| Apr-26 | 3.499 | -47.0 |
| Jun-26 | 3.467 | -50.2 |
| Jul-26 | 3.413 | -55.6 |
| Sep-26 | 3.396 | -57.3 |
| Source: MNI/Bloomberg Finance L.P |
EURIBOR OPTIONS: Latest Option Trades
- ERH6 99.25c, bought for 0.25 in 3.4k.
- ERH6 98.37/98.62cs vs 0RH6 98.37/98.62cs, bought the mid for 1 in 7k.
- ERM6 98.4375/98.50/98.5625c fly, bought for 0.25 in 1.25k.
RBA: Bullock Fireside Chat Begins: Plays Down Recent Jobs Weakness
Link to Bullock Fireside chat here: https://rba.livecrowdevents.tv/MicheleBullockGovernorFiresideatABEAnnualDinner27Oct
Initial headlines:
- "*BULLOCK: BRINGING DOWN INFLATION, KEEPING JOBS VERY SATISFYING" Bloomberg
- "*BULLOCK: EMPLOYMENT MARKET OUTCOMES BETTER THAN SOME COUNTRIES" Bloomberg
Out Asia-Pac team noted earlier that it may be the case Bullock stays quite non-committal around easing risks at that meeting (in Bullock's style of not ruling anything in or out). Market pricing is delicately poised, with a 25bps cut around 60% priced per OIS dated RBA contracts for the Nov meet.
- Monetary policy centered questions may focus on this recent disappointing jobs data but Bullock has said previously that given volatility it is best to focus on the 3-month average of the unemployment rate which was consistent with a gradual easing in conditions. Initial headlines seem to confirm these expectations.
