OPTIONS: Expiries for Jun13 NY cut 1000ET (Source DTCC)
Jun-12 14:31
- EUR/USD: $1.1400-05(E1.7bln), $1.1485-00(E2.0bln)
- USD/JPY: Y144.00($1.3bln)
- EUR/GBP: Gbp0.8475(E902mln)
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STIR: Just Under 50bp Of BoE Cuts Priced Through Dec, Little Changed On Day
May-13 14:27
Little to shape trade in the GBP short end since the labour market data crossed pre-open.
- That leaves just under 50bp of cuts priced through year-end, with the market seemingly happy to consolidate most of the hawkish adjustment that came on the back of the Sino-U.S. tariff reprieve.
- December meeting pricing is nearly 30bp off the dovish extremes witnessed in April.
- The next cut is still fully discounted through the September MPC meeting, with ~80% odds of such a move coming by the end of the August meeting.
- Comments from hawkish BoE dissenter Pill provided little impetus for the space (he flagged next week’s appearance as a more fertile ground for comments surrounding his monetary policy view). He did note that "I remain concerned that we have seen a sort of structural change in price and wage behaviour, may be driven by the type of things that were embodied in the models... from the 70s and 80s.... due to real income resistance, both in the entrepreneurial sector...and in the labour sector in terms of wages... if you believe that, not only does that mean inflation, it would mean, in response to new shock, it may be more and it may mean that the response ensure that we get back to our target within a reasonable time needs to be somewhat more aggressive."
- Nothing of note from BoE Governor Bailey as of yet. He is participating in a fireside chat with ECB GC member Knot at typing.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Jun-25 | 4.194 | -1.7 |
Aug-25 | 4.012 | -19.9 |
Sep-25 | 3.936 | -27.5 |
Nov-25 | 3.786 | -42.4 |
Dec-25 | 3.728 | -48.3 |
Feb-26 | 3.645 | -56.5 |
Mar-26 | 3.629 | -58.1 |
CROSS ASSET: US 10yr Yield edges toward the 4.50% level
May-13 14:19
- The US Tnotes is seeing a round of selling here, and seeing similar flow across Europe, Bobl is sold in 12k, seems that the latest leg higher in US Equities is keeping the lid on Govies despite the US CPI coming a touch below consensus.
- The US 10yr Yield printed a ~4.48% high and the 4.50% level is slightly higher now in futures, up to 109.29+, printed a 110.02 low.
US: House Energy And Commerce Markup Underway Shortly
May-13 14:14
The House Energy and Commerce Committee is scheduled to meet shortly for the first of three critical markups today on President Donald Trump's ‘One Big Beautiful’ reconciliation bill. A livestream of the debate and markup, and the bill text can be found here.
- The OMB yesterday affirmed that E&C Committee Chair Brett Guthrie’s (R-KY) bill hit the target of $880 billion in cuts dictated by the Republican budget resolution. The CBO warned that the roughly $700 billion in health care cuts, including to Medicaid, would lead to an additional 13.7 million Americans going uninsured.
- If Guthrie’s final text fails to balance his conservative flank (calling for deeper cuts) and moderates (who want to preserve as much of Medicaid as possible), it could have consequences for the prospects of the package reaching Trump’s desk. And in the longer term, at the 2026 midterm elections.
- The markup could last more than 24 hours, with Democrats preparing a flurry of messaging amendments highlighting cuts to Medicaid. Politico notes: “Committee Democrats say it could run longer than the marathon 27-hour markup during Republicans’ unsuccessful attempt to repeal the Affordable Care Act in 2017.”
- For a full roundup of what to expect today, see the MNI US Daily Brief.
