STIR: BoE Pricing Sticky Around 70bp Of '25 Cuts
BoE-dated OIS little changed to 1bp more dovish this morning, after yesterday’s late drift lower in core global FI markets resulted in modest hawkish repricing. 69.5bp of cuts priced through year-end.
- SONIA futures essentially unchanged on the day.
- We continue to look for cuts in both February & May, with 23bp and 42bp of cuts priced through those events at present.
- The market has moved back towards our baseline view over the past couple of weeks but seemingly requires fresh dovish cues to move closer towards fully discounting 50bp of cuts through May.
- Little of note on the UK calendar for the remainder of the week, which will leave focus on cross-market cues and macro events.
- Core global FI markets have unwound the immediate sell off that followed the FOMC decision and language tweak, as Fed Chair Powell played down the initial interpretation of the alterations to the statement, saying they were "not meant to send a signal".
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Feb-25 | 4.470 | -23.0 |
Mar-25 | 4.430 | -27.0 |
May-25 | 4.279 | -42.1 |
Jun-25 | 4.224 | -47.6 |
Aug-25 | 4.120 | -58.0 |
Sep-25 | 4.091 | -60.9 |
Nov-25 | 4.022 | -67.8 |
Dec-25 | 4.004 | -69.6 |
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USD: The Dollar is King to end the Year
- The Dollar is mixed against G10 going into the last day of the Year, the Yen is up 0.35% and at the other end of the spectrum the Kiwi is down 0.28% at least for Today.
- Overall the Dollar is king going into 2025, acted as a safer haven throughout the Year, and has also been supported as Desks look for Less cuts from the Fed with Donald Trump on the cusp of taking over the Presidency.
- The biggest loser in G10 YTD is the Kiwi, down some 10.9% for that period, NZDUSD printed a 0.5608 low in December, which was its lowest printed level since October 2022.
- For today, 0.5620 is holding, and market participants will be looking for initial support at 0.5600.
- The NOK is the 2nd worst performer, down 10.26%, printed its lowest level in December since March 2020.
- Main upside Psychological level is still at 11.50 in USDNOK, managed a 11.4769 high on the 20th December.
EQUITY TECHS: E-MINI S&P: (H5) Bear Threat
- RES 4: 6194.19 1.236 proj of the Aug 5 - Sep 3 - Sep 9 price swing
- RES 3: 6178.75 High Dec 6 and key resistance
- RES 2: 6163.75 High Dec 16
- RES 1: 6014.44/6107.50 50-day EMA / High Dec 26
- PRICE: 5957.00 @ 07:22 GMT Dec 31
- SUP 1: 5918.25/5866.00 Low Dec 30 / 20
- SUP 2: 5811.65 38.2% retracement of the Aug 5 - Dec 6 bull leg
- SUP 3: 5784.00 Low Nov 4
- SUP 4: 5698.25 50.0% retracement of the Aug 5 - Dec 6 bull leg
A bear threat in the S&P E-Minis contract remains present and the latest move down highlights the end of the recent Dec 20 - 26 corrective bounce. An extension lower would expose 5866.00, the Dec 20 low and a key short-term support. Clearance of this level would strengthen a bearish theme. Initial firm resistance to monitor is 6107.50, the Dec 26 high. A break of this level is required to open key resistance at 6178.75, the Dec 6 high.
GOLD TECHS: Still Looking For Weakness
- RES 4: $2730.4 - 76.4% retracement of the Oct 31 - Nov 14 bear leg
- RES 3: $2664.5 - High Dec 16
- RES 2: $2726.2 - High Dec 12
- RES 1: $2637.3/2692.8 - 50-day EMA / High Dec 13
- PRICE: $2607.7 @ 07:22 GMT Dec 31
- SUP 1: $2583.6 - Low Dec 19
- SUP 2: $2564.4 - Low Nov 18
- SUP 3: $2536.9 - Low Nov 14 and a key support
- SUP 4: $2511.1 - Low Sep 12
A bear threat in Gold remains present. The yellow metal traded sharply lower on Dec 18 and the move undermines a recent bull theme. A resumption of weakness would open key support at $2536.9, the Nov 14 low. MA studies are in a bull mode position highlighting a medium-term uptrend and this suggests that the latest sell-off is likely a correction. Initial pivot resistance is $2637.3, the 50-day EMA. A breach of this EMA would be positive for bulls.
