STIR: Over 50bp Of BoE Cuts Still Priced Through Dec After CPI
Very modest hawkish adjustments in GBP STIRs on the back of the mixed UK CPI data.
- BoE-dated OIS now shows 53.0bp of cuts through year-end vs. 53.5bp at yesterday’s close.
- Further forwards, 20.5bp of easing is showing through May (when we expect the next BoE cut to be deployed), with only 1bp of easing priced for next month.
- SONIA futures flat to -2.0.
- A reminder that we don’t think that today’s data will shift the needle for any MPC member’s March vote.
- The MPC has shown through its wider communications that it's not too concerned about energy CPI increasing later this year, but if food prices also increase and core goods prices settle at higher levels, that's going to make it harder to get headline CPI back to target without services coming in lower than pre-pandemic levels on a sustainable basis.
- Little of note on the UK calendar for the remainder of today, which should leave focus on continued digestion of the data and macro/cross-market cues.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.444 | -1.0 |
May-25 | 4.250 | -20.4 |
Jun-25 | 4.183 | -27.1 |
Aug-25 | 4.040 | -41.4 |
Sep-25 | 4.005 | -44.9 |
Nov-25 | 3.938 | -51.6 |
Dec-25 | 3.925 | -52.9 |
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STIR: Just Under 65bp Of BoE Cuts Priced Through '25
Little net movement in GBP STIR pricing this morning.
- 63.5bp of cuts priced through year-end after briefly touching 36bp last week.
- Next 25bp cut fully discounted come the end of the March MPC, ~90% priced through the February decision.
- SONIA futures flat to -1.5.
- Much of the weekend domestic headline flow centred on political posturing ahead of U.S. President Trump’s inauguration.
- That event dominates the macro calendar today.
- UK labour market data is due tomorrow.
- The dovish and centrist members of the BoE MPC are focusing more on growth data and deemphasising labour market data.
- We (and the market) still pay attention to the wage data in particular and are concerned it may increase more than the Bank estimates in H125, although we do see increased risks of downside growth shocks putting some downside pressure on wages.
- Expect our full preview of that release later today.
- Flash PMI data is due Friday.
- The market could be very sensitive to the PMIs, given the focus on any signs that the UK economy may be slowing further.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Feb-25 | 4.473 | -22.7 |
Mar-25 | 4.432 | -26.8 |
May-25 | 4.301 | -39.9 |
Jun-25 | 4.252 | -44.8 |
Aug-25 | 4.165 | -53.5 |
Sep-25 | 4.137 | -56.3 |
Nov-25 | 4.085 | -61.5 |
Dec-25 | 4.065 | -63.5 |
EQUITY TECHS: E-MINI S&P: (H5) Is Through The 50-Day EMA
- RES 4: 6178.75 High Dec 6 and key resistance
- RES 3: 6163.75 High Dec 16
- RES 2: 6068.25/6107.50 High Jan 6 / High Dec 26
- RES 1: 6051.50 High Jan 17
- PRICE: 6034.75 @ 07:27 GMT Jan 20
- SUP 1: 5961.75 Low Jan 16
- SUP 2: 5879.50/5809.00 Low Jan 15 / 13
- SUP 3: 5784.00 Low Nov 4
- SUP 4: 5698.25 50.0% retracement of the Aug 5 - Dec 6 bull leg
S&P E-Minis traded higher again, Friday. Last week’s gains undermine the recent bearish theme. The contract has traded through the 50-day EMA and attention is on resistance at 6107.50, the Dec 26 high. Initial resistance is at 6068.25, the Jan 6 high. Clearance of 6107.50 would strengthen a bullish theme. Key support has been defined at 5809.00, the Jan 13 low. A reversal lower and a breach of this level would reinstate a bear theme.
MNI EXCLUSIVE: MNI INTERVIEW:Global Focus On Fiscal Strains- Ex ECB Economist
Former European Central Bank economist Riccardo Trezzi speaks about the outlook for fiscal and monetary policy..-On MNI Policy MainWire now, for more details please contact sales@marketnews.com
