SONIA: SONIA FIX - 26/03/25

SONIA FIX - Source: BBG/ICE

• 1M 4.46010 -0.0024
• 3M 4.42530 -0.0138
• 6M 4.33260 -0.013
• 12M 4.21080 -0.0177

• In the FI space, the rebound in Bund futures on Friday appears to be corrective - for now. The contract has traded through the 20-day EMA and attention turns to key short-term resistance at 132.97, the Feb 13 high. Clearance of this level would signal a reversal. On the downside, the short-term bear trigger has been defined at 131.26, the Feb 19 low. A break of this level would resume the bear cycle that started Feb 5.
• A bull cycle in Gilt futures has moderated, but remains the underlying theme, meaning recent weakness still appears corrective for now. Initial resistance to watch is 93.50, the Feb 13 high. A break of this level would highlight an early bullish reversal signal and refocus attention on the key short-term resistance at $94.35, the Feb 6 high. On the downside a continuation lower would instead expose the next important support at 91.52, the Jan 24 low.

• We will hear from both Dhingra and Ramsden outside of the BOE's Agenda for Research (BEAR) conference (this week). We think that the speech from Ramsden has the potential to be the most interesting for macro markets this week.
• Ramsden is due to speak at Stellenbosch University in South Africa on Friday at 7:00GMT (as well as chairing the BEAR discussion). He voted in favour of the enacted cuts in August, November and February. He also dissented in favour of a sequential 25bp cut in December and favoured an earlier first cut (first voting for 25bp cuts in May and June). His previous speeches have been quite focused on how wage growth impacts service price inflation but we haven't heard directly from him since the BOE Agents' Pay Survey pointed to 3.7% pay growth in 2025 (the last time he spoke the early indications of the survey were pointing to 2-4% but this was narrowed to 3-4% in December when he first dovishly dissented). It would be a surprise if he did not vote for sequential cuts in the near-term, after voting for the December cut. We will be watching his Friday speech for any change in tone, as well as any indication on where he estimates the neutral rate to be.
• Swati Dhingra is also due to speak twice this week: tonight at 18:00GMT on the state of UK monetary policy as well as on Wednesday at NIESR on "Trade fragmentation and monetary policy." Her views are unlikely to be market moving, however. She has been consistently dissenting on the dovish side and in February joined Mann in voting for a 50bp cut. She may repeat this 50bp cut vote in March - but whether she votes for a 25bp cut or a 50bp cut should make little difference to the wider MPC.