MEXICO: Minister Ebrard Says ~$298B (16% of GDP) of Investment Projects Planned

• Fed Funds implied rates are back little changed to levels prior to the 1000ET data.
• Misses across the board at a headline level helped see a further extension of a dovish play seen pre-data, but those releases also contained signs of further inflationary pressures for both the Conference Board consumer survey and the Richmond Fed manufacturing index.  
• The intraday decline only pares yesterday’s hawkish reaction to a stronger US PMI though, see the below table for a comparison.
• Cumulative cuts from 4.33% effective: 4bp May, 17.5bp Jun, 28.5bp Jul, 43.5bp Sep and 63bp Dec (vs 59bp as US desks filtered in today and 67bp before yesterday’s PMI). 

GBP STIRs hold onto the bulk of their modest hawkish adjustment, with gilts reluctant to rally too far from session lows.

• BoE-dated OIS shows ~41bp of cuts through year-end, with 14.5bp priced for May, 17bp through June and 26.5bp through August. ’25 MPC meeting contracts are little changed to 2bp more hawkish on the day.
• December pricing is currently the most hawkish seen since Jan 22.
• We, along with the sell-side consensus, look for the next BoE cut to come in May.
• SONIA futures little changed to -3.0.
• CPI data is due ahead of tomorrow’s Spring Statement (the former is scheduled for 07:00 GMT on Wednesday).
• This is a bit later in the month than usual (possibly due to the 2025B weights update).
• BBG surveys point to core and services CPI ticking down by a tenth (to +3.6% & +4.9%, respectively), while the headline CPI reading is seen steady (+3.0%).
• Last week’s MPC meeting minutes picked up on the move higher in both core goods and food prices in January.
• If upside pressures to goods prices are maintained, services inflation needs to be lower than pre-pandemic levels to meet the 2% headline target. That could require more restrictive policy than was seen in pre-pandemic times.
• Ultimately, this means that non-energy goods inflation will be much more important during 2025, almost on a par with services inflation.
• A reminder that the PPI release has been postponed indefinitely due to issues with the data.

SX5E (20th Jun) 3300/2700ps, bought for 1.4 and 1.5 in 20k.