STIR: Hawkish BoE Repricing Extends, Less Than 45bp Of Cuts Show Through Dec
Continued hawkish adjustment in GBP STIRs, with spill over from yesterday’s bond sell off and Japanese labour union wage demands noted early today as bonds remain under pressure.
- BoE-dated OIS little changed to 6bp more hawkish across ’25 meetings.
- Just over ~44bp of cuts priced through year-end, with 17.5bp of easing priced through May, 21bp through June and 33bp through August. We still look for the next cut to come in May at this stage.
- SONIA futures 0.25-10.0 lower. SFIZ5 to the lowest level seen since late January.
- Yesterday’s BoE TSC hearing did little for markets, with policymakers generally sticking to their respective stances.
- The BoE DMP survey headlines the local data calendar today, with comments from BoE hawk-turned-dove Mann also due (15:00).
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.460 | +0.4 |
May-25 | 4.281 | -17.4 |
Jun-25 | 4.244 | -21.1 |
Aug-25 | 4.125 | -33.1 |
Sep-25 | 4.101 | -35.4 |
Nov-25 | 4.022 | -43.3 |
Dec-25 | 4.012 | -44.3 |
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STIR: 65bps of ECB Cuts Priced Through The Next Three Meetings
Euribor futures trade within yesterday’s ranges, with global markets displaying a relatively contained reaction to China’s tariff retaliation against the US overnight. Futures are -0.5 to -3.5 ticks through the blues.
- ECB-dated OIS continue to more than fully price a 25bp cut in March, with 20bps of sequential cuts priced through April and another 18bps through June.
- 87bps of easing are priced through year-end.
- Although flash January inflation was a little above consensus on the headline and core measures yesterday, underlying core and services inflation momentum continued to ease.
- Today’s regional calendar is light, with Banque de France Governor Villeroy scheduled to speak at 1330GMT/1430CET.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Mar-25 | 2.403 | -26.5 |
| Apr-25 | 2.205 | -46.3 |
| Jun-25 | 2.023 | -64.5 |
| Jul-25 | 1.947 | -72.1 |
| Sep-25 | 1.853 | -81.5 |
| Oct-25 | 1.831 | -83.7 |
| Dec-25 | 1.797 | -87.1 |
| Feb-26 | 1.795 | -87.3 |
| Source: MNI/Bloomberg. | ||
EQUITY TECHS: E-MINI S&P: (H5) Bearish Threat Still Present
- RES 4: 6178.75 High Dec 6 and key resistance
- RES 3: 6162.25 High Jan 24
- RES 2: 6147.75 High Jan 31
- RES 1: 6069.00 High Feb 3
- PRICE: 6017.50 @ 07:25 GMT Feb 4
- SUP 1: 5935.50 Low Feb 3
- SUP 2: 5892.37 76.4% retracement of the Aug 5 - Dec 6 bull leg
- SUP 3: 5842.50 Low Jan 14
- SUP 4: 5809.00 Low Jan 13 and a key resistance
The S&P E-Minis contract started the week on a bearish note. The gap lower Monday and a breach of support at 5948.00, the Jan 27 low, strengthens a bearish threat and cancels - for now - a recent bullish theme. An extension down would open 5892.37, a Fibonacci retracement point. Initial resistance is at 6069.00, today’s intraday high. Gains are considered corrective, however, a stronger rally would expose key resistance at 6178.75, the Dec 6 high.
USD: A volatile session for FX
- The Dollar is in the Green across the board, Tariff and deadline headlines dominate in Global markets going into the European session.
- The Kiwi was and still is the worst performer today, but the NZDUSD is some way short of 0.5516, Yesterday's low.
- This is a big support area level, since 0.5512 is the 2022 low and the lowest printed level since March 2020.
- The most traded Global pair is recovering some of its earlier losses, EURUSD is slowly edging back above 1.0300, after it exchanged hands at its worst level since November 2020 Yesterday at 1.0141.
- While it tested a 1.0350 overnight, the initial resistance will be eyed at 1.0387 20-day EMA.
