STIR: Modest Dovish GBP STIR Reaction To PMIs
Jul-24 08:46
The softer-than-expected services PMI data helps keep BoE pricing through year-end tethered to 50bp of cuts, with BoE-dated OIS contracts little changed to 1.5bp more dovish vs. pre-data levels. SONIA futures rally away from lows, last +1.0 to -2.0.
- We have noted that the survey will keep concerns around the weakening labour market at the fore. However, an uptick in input cost and output charge inflation will complicate the readthrough for the BoE a little.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Aug-25 | 3.989 | -22.8 |
Sep-25 | 3.945 | -27.2 |
Nov-25 | 3.788 | -42.9 |
Dec-25 | 3.726 | -49.1 |
Feb-26 | 3.611 | -60.6 |
Mar-26 | 3.580 | -63.7 |
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EGB FUNDING UPDATE: 11-month Bubills reintroduced
Jun-24 08:43
- Last note on the German Q3 issuance plan: all of the E4bln increase in bubill issuance will be made up by the reintroduction of 11-month Bubill auctions.
- Since the beginning of 2025 we haven't had regular 11-month Bubills auctions (outside of a launch auction in January due to there being no 12-month launch in December 2024).
- The 11-month Bubill auctions will be smaller than those generally seen last year with the July auction sized at E1.0bln and the August and September auctions at E1.5bln.
- This means that all of the extra bubill funding will mature next year, of course, so feed into the 2026 redemptions rather than 2025 redemptions.
EURIBOR OPTIONS: Put Fly vs Put
Jun-24 08:40
0RU5 98.375/98.25/98.125p fly vs 97.875p, bought the fly for -0.5 in 8k.
MIDEAST: Iran Denies Ceasefire Breach As Israel Threatens Retaliation
Jun-24 08:35
Iranian state media outlet IRIB claims that the Iranian gov't denies that it has launched any missiles at Israel in breach of the ceasefire agreement.
- Israeli media claims that two missiles were fired from Iran at northern Israel, with gov't figures threatening retaliation against Tehran.
- The early hours of ceasefires can often prove erratic periods as communication channels going down the line of command are not always efficient.
- The apparent firing of two missiles from Iran could indicate either rogue elements within the Iranian armed forces or the IRGC not content with the ceasefire looking to re-escalate the conflict, a breakdown in the command-and-control structure within the Iranian armed forces meaning the ceasefire order was not enforced across the military, or the regime itself chose to fire the missiles and is now denying its actions. All come with notable risks to stability.
- Asked on the Israeli response, President Isaac Herzog says, "those who are authorised to do so will certainly make the decisions," while IDF Chief of Staff Maj. Gen. Eyal Zamir said, "In light of the serious violation of the ceasefire carried out by the Iranian regime, we will attack with force."
- Iran's Fars News reports comments from the Supreme National Security Council saying Israel was forced by the US to accept a "one-sided ceasefire", and that "Iran's armed forces have no trust in the words of its enemies and will keep [its] finger on the trigger to respond to any further act of aggression".
