00:00This could be something that we feel at the start of trade here in Europe.
00:02FTSE futures are called quite a bit higher than other futures here in Europe.
00:06And I note that it was some of the oil majors that weighed on the London market yesterday.
00:10And so, I mean, that might be, there might be little else to say about that phenomenon.
00:14But we might see some outperformance by London as a result of that.
00:18Yeah, I mean, we definitely could see that.
00:20I think, you know, the oil story is a smaller story within the broader market context.
00:25There's so much going on this week.
00:27I think the U.S. data is certainly having an impact globally.
00:31You're seeing ricochets from what we got from nonfarm payrolls yesterday and labor markets.
00:35I think generally you're more on edge because you have so much data this week.
00:39And then we also just have a huge number of central banks tomorrow.
00:43And so I think I'd look more towards that and that story rather than kind of littler stories around the oil market.
00:50It can certainly impact sector rotation.
00:51But I think broadly we're more concerned about how that data and bank decisions evolve.
00:57Well, yeah, I've had to pick between Threadneedle Street and Frankfurt tomorrow for the ECB versus BOE decisions.
01:04And, you know, the BOE just had this CPI print come in.
01:08You've had traders changing their bets for BOE next year.
01:12Which one's going to be more interesting tomorrow, do you reckon, BOE or ECB?
01:16I mean, definitely the Bank of England.
01:18I think that's always the case, right, because you have this BOE split that watched very closely.
01:23I think, as you say, the data we got this morning, inflation came in lower.
01:28I think we very convincingly got data since the last Bank of England meeting that told you inflation peaked in September and it's been on a downtrend since then.
01:36And, yes, some of the prints maybe haven't been read as clearly by the market in terms of we got wage data yesterday and it was a little bit hotter than expectations.
01:43But the key is that you're still seeing that downtrend.
01:45So private sector pay was down quite considerably for the Bank of England that feeds into services inflation.
01:51And so that means you can ease tomorrow.
01:54And I think that's certainly helpful for guilt.
01:56I think also what's underappreciated is how much that inflation helps.
01:59And by that, I mean you get this kind of virtuous cycle where lower inflation means you have lower yields in the U.K., which is lower debt servicing costs, which means you can have lower risk premium and lower yields again.
02:11And so that gets this kind of going in a good way, especially because so much of the U.K. debt is inflationally relative to elsewhere.
02:18And so what kind of messaging will the central bank want to attach to any decision, do you think?
02:24Will they be happy with the way that the market is receiving all of this?
02:26Because inflation is still high, but if you look at the forecast for next year, it's expected to come down really quite quickly.
02:32How many rate cuts will the bank feel comfortable with the market pricing in, do we think?
02:37Yes, I think this is the issue is you don't get consistent messaging from the Bank of England.
02:41So, you know, there might be some members that say that's totally fine.
02:44We can have that many cuts next year.
02:46And I think actually the risk is skewed more towards a hawkish meeting tomorrow because of that or a hawkish surprise because all of the data has been so clear since the last meeting on the dovish side.
02:56Inflation coming down.
02:57And so it is now fully priced and you are still likely to have a board split.
03:01The last decision was very close.
03:04And so I think, you know, maybe you get a bit more of a wobble and guilt.
03:07And then I think the outlook's less clear in terms of the pound and that, yes, risk premium compression and lower policy rates is very positive for guilt.
03:15But it's more of a mixed outlook for the pound.
03:18OK, let's see if maybe we get a sterling rally off the back of a hawkish BOE cut.
03:23Well, Bloomberg Skyler, Montgomery, Koenig, thank you so much for that analysis.
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