STIR: Just Over 70bp Of BoE Cuts Priced For '25, Reeves Due
A bid in core global FI markets filters into GBP STIRs.
- No clear driver. Increased French political risk apparent, but OATs have been unreactive to the news.
- European earnings set the tone in early equity futures trade, as detailed earlier.
- BoE-dated OIS flat to a couple of bp more dovish on the day, showing ~71bp of cuts through ’25.
- SONIA futures flat to +3.0.
- Comments from UK Chancellor Reeves due from just after 10:00. We provided greater colour in an earlier bullet. It is unlikely to be a market moving speech based on the already-released excerpts.
- As a result, macro and cross-market cues will be eyed today, with the UK data calendar subdued through the end of the week.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Feb-25 | 4.474 | -22.7 |
Mar-25 | 4.424 | -27.7 |
May-25 | 4.275 | -42.5 |
Jun-25 | 4.214 | -48.6 |
Aug-25 | 4.105 | -59.5 |
Sep-25 | 4.077 | -62.3 |
Nov-25 | 4.014 | -68.6 |
Dec-25 | 3.994 | -70.6 |
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Historical bullets
EQUITY TECHS: E-MINI S&P: (H5) Support Remains Exposed
- 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: 6107.50 High Dec 26
- PRICE: 6008.25 @ 07:24 GMT Dec 30
- SUP 1: 5965.00/5866.00 Low Dec 23 / 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 Friday’s move lower 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 expose key resistance at 6178.75, the Dec 6 high.
CROSS ASSET: Markets Pick Up Where They Left Off
Markets have generally picked up where they left off on Friday - although the US 10y yield has drifted off the closing high to trade back to 4.60%, a move that's likely keeping the USD pinned so far Monday, helping the likes of AUD/USD and NZD/USD to hold above the recent pullback lows.
- Equity futures remain lower across the board, with US index futures pointing to another lower open today to build on the softer Friday close. Meanwhile Bund futures are off the lowest levels, but remain perilously close to 132.71, the December low posted at the re-opening of trade after the weekend.
- Significant newsflow has been few and far between, with US domestic politics focusing on the internal Republican debate over H-1B visas and the passing of President Carter.
- Focus for the duration of Monday trade will be on the MNI Chicago PMI at 1445GMT, expected to tick up to 43.0 from 40.2 previously.
- We anticipate volumes and broader liquidity to remain very light over the coming two sessions, particularly with tomorrow's European market closures and early closes elsewhere. EUR futures are posting cumulative volumes ~30% below an already subdued average for this time of day.
BTP TECHS: (H5) Bears Remain In The Driver’s Seat
- RES 4: 123.34 High Dec 11 and key resistance
- RES 3: 122.85 High Dec 12
- RES 2: 121.94 High Dec 13
- RES 1: 120.70/121.14 High Dec 20 / 20-day EMA
- PRICE: 119.85 @ Close Dec 27
- SUP 1: 119.41 Low Dec 27
- SUP 2: 119.11 Low Nov 18
- SUP 3: 118.80 76.4% retracement of the Nov 7 - Dec 11 bull cycle
- SUP 4: 118.51 Low Nov 8
A corrective cycle in BTP futures has resulted in a pullback from its recent highs and Friday’s sell-off highlights and extension of the current bear cycle. The contract has recently breached the 20-day EMA and sights are on 118.80, a Fibonacci retracement point. Key resistance and the bull trigger has been defined at 123.34, the Dec 11 high. Initial firm resistance is seen at 121.14, the 20-day EMA.
