STIR: Just Under 40bp Of BoE Cuts Priced For '26
Spillover from the late ’25 NY/early ’26 Asia-Pac weakness in Tsys provides some modest hawkish repricing for GBP STIRs, although the picture is broadly unchanged from late ’25 pricing.
- Liquid BoE-dated OIS contracts are flat to 1.5bp less dovish.
- Markets show just under 40bp of cumulative easing for ’26, with the next 25bp move not fully discounted until the end of the June MPC (~21bp of easing is priced through April).
- We think that progress on headline CPI and official labour market data will not be sufficient to justify the next BoE rate cut, in isolation. It is likely that the Bank will also need to see progress on inflation expectations data as well as further DMP prints and a non-adverse result from the Agents' Pay Survey.
- SONIA futures are little changed to 3.0 lower.
- SFIZ6 trades a little above the mid-point of its Dec range.
- SFIH6/Z6 respected prior December lows on the final trading day of ’25.
- Final manufacturing PMI data is due this morning.
- Nationwide house price readings were softer than expected.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Feb-26 | 3.710 | -1.6 |
Mar-26 | 3.623 | -10.3 |
Apr-26 | 3.514 | -21.1 |
Jun-26 | 3.447 | -27.8 |
Jul-26 | 3.377 | -34.9 |
Sep-26 | 3.358 | -36.8 |
Nov-26 | 3.333 | -39.2 |
Dec-26 | 3.334 | -39.1 |
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STIR: Dec BoE Pricing Stable, Over 80% Odds Of Cut Showing
Extension of the recovery from yesterday’s lows in core global FI markets provides modest dovish impulses in GBP STIRs.
- BoE-dated OIS still prices ~22bp of easing for this month’s meeting, with a cumulative 48.5bp of easing discounted through April and 53.5bp showing through June.
- SONIA futures flat to +2.0, with implied terminal rate pricing steady, hovering around 3.35%. SFIZ6 is 5bp off November’s cycle high.
- Final services and composite PMI data is due this morning, tangible market reaction would only be seen on a meaningful departure from the preliminary 50.5 reading in the services PMI.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Dec-25 | 3.749 | -22.1 |
Feb-26 | 3.684 | -28.6 |
Mar-26 | 3.596 | -37.4 |
Apr-26 | 3.485 | -48.5 |
Jun-26 | 3.436 | -53.4 |
Jul-26 | 3.371 | -60.0 |
Sep-26 | 3.352 | -61.8 |
RIKSBANK: VIEW: Danske Look For Hiking Cycle To Start In Dec '26
Danske Bank have updated their Riksbank call. They now expect a 25bp hike in December ‘26 (previously unchanged) and another 25bp hike in March ‘27.
- They note that the economic recovery has “progressed at a solid pace since the second quarter of this year and full-year growth for 2025 is expected to reach close to 2%. Moreover, both hard and soft data indicate that the economy is on track to strengthen further”.
- They go on to flag that “resource utilisation remains low, implying that there are idle resources in the economy. The labour market is also mostly moving in the right direction, so fears of high unemployment levels may soon give way to greater optimism”.
EQUITY TECHS: E-MINI S&P: (Z5) |Holding On To Its Recent Gains
- RES 4: 6953.75 High Oct 30 and bull trigger
- RES 3: 6900.50 High Nov 12
- RES 2: 6852.56 76.4% retracement of the Oct 30 - Nov 21 bear leg
- RES 1: 6864.50 High Dec 1
- PRICE: 6856.75 @ 07:23 GMT Dec 3
- SUP 1: 6674.50/6525.00 Low Nov 25 / 21
- SUP 2: 6500.00 Round number support
- SUP 3: 6476.62 23.6% retracement of the Apr 7 - Oct 30 uptrend
- SUP 4: 6427.00 Low Sep 2
S&P E-Minis are holding on to their recent gains following the recovery from the Nov 21 low. The climb has resulted in a breach of the 20- and 50- day EMAs. This highlights a bullish development and the likely end of the corrective cycle between Oct 30 and Nov 21. A continuation higher would signal scope for a move towards the key resistance and bull trigger at 6953.75, the Oct 30 high. Key support lies at 6525.00, the Nov 21 low.
