UKRAINE: Zelenskyy To Curtail SA State Visit After Kyiv Missile Attack
Ukrainian President Volodymyr Zelenskyy has confirmed that he will be curtailing his visit to South Africa following a massive Russian missile attack overnight, centred on Kyiv, that has killed at least nine. In a post on X, Zelenskyy says "I am canceling [sic] part of the program for this visit and will return to Ukraine immediately after the meeting with the President of South Africa."
- A truncated visit to South Africa will come as a blow to Ukraine. At the outset of the war, South Africa came in for criticism from Western nations for its refusal to condemn Russia's full-scale invasion. However, the US' increasingly isolationist stance has seen Kyiv forced to seek effective mediation where it can.
- South Africa's own diplomatic spat with the US and its criticism of Russia in a UN resolution in Feb could see the South African gov't take on a more prominent role in brokering any peace deal.
- Following the hardline comments aimed at the Zelenskyy administration from both US President Donald Trump and VP JD Vance on 23 April (see 'SECURITY: Trump & Vance Take Hard Line On Zelenskyy In Statements On Ukraine War', 1722BST), Kyiv appears to be in the position of either taking the 'Trump peace plan' offer, resulting in the ceding of significant portions of land in the east and south, or looking to fight on but potentially only with the military and financial support of its European allies.
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STIR: Hawkish BoE Repricing Moves Towards 40bp Of Cuts Through Dec
Modest hawkish moves in GBP STIRs this morning as bonds soften.
- BoE-dated OIS flat to 1.5bp more hawkish across the curve, showing 14.5bp of cuts for May, 17bp through June, 26bp through August and 42bp through December.
- A close at current levels for December MPC pricing would be the most hawkish close seen since late January.
- We, as well as the wider sell-side consensus, still look for the next cut to come in May.
- SONIA futures flat to -1.5 last.
- The combination of hawkish Fed rhetoric, a bid in oil and an early uptick in European equities (seemingly on increased hope for U.S. tariff reprieve) weighs on bonds.
- Late Monday comments from BoE Governor Bailey stayed away from monetary policy and focused on the weakness of productivity growth as well as labour supply issues.
- An FT story provided the latest fiscal colour ahead of tomorrow’s Spring Statement, essentially confirming the erosion of the fiscal headroom outlined in the Autumn Budget, while pointing to more than GBP5bln of further spending cuts.
- The piece also suggested that the OBR forecast for UK economic growth in ’25 will be halved to ~1%.
- Little of note on the UK calendar until tomorrow’s CPI & fiscal event risk, which will leave focus on cross-market & macro matters for much of the session.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
May-25 | 4.312 | -14.4 |
Jun-25 | 4.284 | -17.2 |
Aug-25 | 4.194 | -26.2 |
Sep-25 | 4.146 | -31.1 |
Nov-25 | 4.064 | -39.2 |
Dec-25 | 4.039 | -41.7 |
CROSS ASSET: Bond futures are drifting lower
- As noted in the Bund opening comment, some focus on the price action in the US Tnotes, and the immediate support of 110.12+.
- There's some pick up in Volumes to the downside, Bobl is sold in over 6k, and Tnotes another 15k in the past 5 minutes or so.
- Early focus in Europe will be on supply.
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