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2022 Hike Pricing Shoots Higher As Knot Open To 50bp In July

ECB

ECB's Knot comments that a 25bp July rate hike "seems realistic" but that "a bigger increase must not be excluded either" if incoming data suggests inflation is "broadening further or accumulating" (as reported by Reuters). He suggests "In that case a logical next step would amount (to) half a percentage point."

  • ECB implied Dec meeting rate shot higher by ~8bp, from 0.38% to 0.46% (see chart). Settling down a little now but implies a little over 100bp of 2022 hikes. For July's meeting, pricing moved up 4bp to -0.30%, suggesting more than a quarter-point hike in July.
  • EURUSD pushed above 1.05; resistance is at 1.0583, the 20-day EMA.

Source: BBG

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ECB's Knot comments that a 25bp July rate hike "seems realistic" but that "a bigger increase must not be excluded either" if incoming data suggests inflation is "broadening further or accumulating" (as reported by Reuters). He suggests "In that case a logical next step would amount (to) half a percentage point."

  • ECB implied Dec meeting rate shot higher by ~8bp, from 0.38% to 0.46% (see chart). Settling down a little now but implies a little over 100bp of 2022 hikes. For July's meeting, pricing moved up 4bp to -0.30%, suggesting more than a quarter-point hike in July.
  • EURUSD pushed above 1.05; resistance is at 1.0583, the 20-day EMA.

Source: BBG