A Recap Of Recent Moves

Feedthrough from the combination of dovish comments from ECB’s Villeroy re: disinflation coming at a faster rate than expected/his failure to push back on market pricing of cuts and the headline ISM m’fing survey print (albeit with prices paid not as contractionary as expected) dominates in recent trade.

• ECB-dated OIS now sees a little over 130bp of cuts priced for ’24 on the whole vs. closer to 80bp at the start of the week, with today’s levels representing a new cycle extreme.
• This, coupled with Tsy yield feedthrough from the ISM survey, provides a fresh leg of support for equities, with e-minis and VG1 futures off lows.
• The broader USD initially firmed on the back of Villeroy’s comments, before the ISM print capped that moved. BBDXY sits in a contained range, last printing a little softer on the day.