STIR: BoE Pricing Steady Just Under 60bp Of Cuts Through Dec, Tariff Risk Eyed
Feb-14 07:52
UK focus is centred on increased risk of U.S. tariffs, owing to President Trump’s intention to deploy levies on countries that use VAT.
- Although a period before reciprocal tariffs are implemented by the U.S. (early April) seemingly provides a negotiating window.
- GBP STIRs little changed to slightly more hawkish as a result.
- BoE-dated OIS showing ~58bp of cuts through year-end, little changed on the day.
- ~90% odds of a 25bp cut priced through the end of the May MPC, which is when we look for the BoE to deliver its next rate cut.
- SONIA futures flat to 2.5 lower.
- Expect macro and cross-market cues to dominate ahead of the weekend.
- Little of note on the UK calendar today, with labour market (Tuesday) & inflation (Wednesday) data headlining next week.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.425 | -2.9 |
May-25 | 4.227 | -22.7 |
Jun-25 | 4.147 | -30.7 |
Aug-25 | 3.996 | -45.7 |
Sep-25 | 3.962 | -49.2 |
Nov-25 | 3.892 | -56.2 |
Dec-25 | 3.877 | -57.7 |
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