BOE: MNI BOE Preview - December 2025: What follows a Christmas cut?

Fed Vice Chair Jefferson's speech Monday is here. The key quotes are below - he's likely one of the 9 FOMC members who anticipated cutting rates in Sep, Oct and Dec (in his September Dot Plot) and if forced to guess we would think he is still marginally in favor of a December cut and here he again highlights "increased downside risks to employment compared to the upside risks to inflation, which have likely declined somewhat recently".

• But his increasingly cautious tone is echoing the broader Committee; on Nov 7 he said "it makes sense to proceed slowly as we approach the neutral rate", this time he says there is a "need to proceed slowly as we approach the neutral rate."
• Today he says: "I supported last month's decision to reduce our policy rate by 1/4 percentage point. That step was appropriate because I see the balance of risks as having shifted in recent months as downside risks to employment have increased. The current policy stance is still somewhat restrictive, but we have moved it closer to its neutral level that neither restricts nor stimulates the economy. The evolving balance of risks underscores the need to proceed slowly as we approach the neutral rate."
• "Heading into our next meeting, it remains unclear how much official data we will see before then. With respect to the path of the policy rate going forward, I will continue to determine policy based on the incoming data, the evolving outlook, and the balance of risks. I always take a meeting-by-meeting approach. This is an especially prudent approach at this time."

Latest Tsy quarterly futures roll volumes from December'25 to March'26 outlined below. Modest volumes with percentage complete currently in the single digits. "First Notice" date Friday, November 28. Current roll details:

• TUZ5/TUH6 appr 8,000 from -5.5 to -5.25, -5.5 last; 1% complete
• FVZ5/FVH6 appr 38,900 from -2.5 to -2.25, -2.25 last; 4% complete
• TYZ5/TYH6 appr 97,300 from -1.75 to 2.0, 1.75 last; 5% complete
• UXYZ5/UXYH6 under 200 from 5.25 to 5.5, 5.5 last; 1% complete
• USZ5/USH6 appr 17,600 from 10.5 to 12.5, 11.75 last; 2% complete
• WNZ5/WNH6 appr 2,700 from 10.0 to 10.25, 10.25 last; 1% complete
• Reminder, Dec'25 futures don't expire until next month: 10s, 30s and Ultras on December 19, 2s and 5s on December 31. Meanwhile, Dec'25 Tsy options will expire this Friday, November 21

SPX: 6,725.8 (-0.1%); DJIA: 47,093 (-0.1%/-54pts); NDX: 24,972.5 (-0.1%).