STIR: Sharp Dovish Repricing At Front Of SONIA Curve Following Soft CPI
Oct-22 06:40
White/Red SONIA futures opened up 7.0-8.5 ticks before taking another leg higher, currently +9.0 (Z5) to +12.0 (M6, U6) . SFIU6 is now at 96.645, its highest since the start of July.
- The September inflation report was softer-than-expected.
- Core CPI was 3.52% Y/Y, two tenths below consensus and down from 3.59% in August. Food and non-alcoholic beverages presented the largest downside surprise, which is significant given the MPC’s focus on food inflation as a driver of inflation expectations and inflation persistence.
- SONIA-dated OIS now price an indicative ~10bps of cuts priced through November (according to Bloomberg data), around 7bps more dovish than yesterday’s close.
- There are now 61bps of easing priced through the next 12 months, up from just below 50bps yesterday.
- A reminder that October flash PMI data is still to come this week, due on Friday morning.
- There aren’t any more BOE speakers scheduled this week, but we judge there is now an increasing prospect of Governor Bailey (the key swing voter in our view), voting for a Q4 cut.
| Meeting Date | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| Nov-25 | 3.871 | -9.7 |
| Dec-25 | 3.796 | -17.2 |
| Feb-26 | 3.652 | -31.6 |
| Mar-26 | 3.589 | -37.9 |
| Apr-26 | 3.483 | -48.5 |
| Jun-26 | 3.444 | -52.4 |
| Jul-26 | 3.385 | -58.4 |
| Sep-26 | 3.362 | -60.6 |
| Source: MNI/Bloomberg Finance L.P |
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BOE: MNI BOE Review: Sep 2025 - Nothing to change Q4 expectations
Sep-22 06:38
For the full MNI BOE Review, including updated summaries of over 20 sell side analysts click here.
- With guidance unchanged, the 7-2 vote as expected and little new of note in the Minutes we think there should have been little to change the prospect of a Q4-25 cut in the September MPC meeting.
- However 10/21 sell side analysts that we track have pushed back their expectations of the timing of their next cut (albeit analysts still remain more dovish overall than market pricing).
- We think that markets under-price the prospect of both a November and a December cut (corrected from September in initial post).
- We look at the implications of the decision to target a GBP70bln APF reduction over the next year and will be watching ILTR / STR operations closely in coming weeks as supply-led reserve balances move below the top of the Bank's PMRR (preferred minimum range of reserves).
EQUITY TECHS: E-MINI S&P: (Z5) Northbound
Sep-22 06:37
- RES 4: 6787.63 1.382 proj of the Aug 1 - 15 - 20 price swing
- RES 3: 6750.50 2.000 proj of the Aug 20 - 28 - Sep 2 price swing
- RES 2: 6748.50 1.236 proj of the Aug 1 - 15 - 20 price swing
- RES 1: 6731.50 High Sep 19
- PRICE: 6712.50 @ 07:26 BST Sep 22
- SUP 1: 6602.01 20-day EMA
- SUP 2: 6536.50 Low Sep 8
- SUP 3: 6487.14 50-day EMA
- SUP 4: 6417.25 Low Aug 12
A bull cycle in S&P E-Minis remains intact and the contract traded to a fresh cycle high on Friday. Price has breached the 6700.00 handle and this signals scope for an extension towards 6748.50, a Fibonacci projection point. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend and positive market sentiment. Initial support to watch lies at 6602.01, the 20-day EMA.
BOE: MNI BOE Review: Sep 2025 - Nothing to change Q4 expectations
Sep-22 06:35
For the full MNI BOE Review, including updated summaries of over 20 sell side analysts click here.
- With guidance unchanged, the 7-2 vote as expected and little new of note in the Minutes we think there should have been little to change the prospect of a Q4-25 cut in the September MPC meeting.
- However 10/21 sell side analysts that we track have pushed back their expectations of the timing of their next cut (albeit analysts still remain more dovish overall than market pricing).
- We think that markets under-price the prospect of both a November and a December cut.
- We look at the implications of the decision to target a GBP70bln APF reduction over the next year and will be watching ILTR / STR operations closely in coming weeks as supply-led reserve balances move below the top of the Bank's PMRR (preferred minimum range of reserves).
