An ECB-induced STIR rally has seen Euribor.....>

STIR: An ECB-induced STIR rally has seen Euribor futures lead the way higher

today. The ECB announced a new round of TLTRO operations which will begin in

September this year and be followed up every quarter for the next six quarters.

Each TLTRO will have a maturity of two years but other details were scarce. In

addition, the ECB lowered its growth and inflation forecasts substantially,

particularly for 2019 while continuing to point to downside risks to these lower

forecasts with external vulnerabilities the main driver. Forward guidance was

also extended to keep rates unch through 2019.

- The front end of the Euribor curve has flattened with Whites up 0.5-2.5 ticks

higher, Reds 3-6 ticks higher and the rest of the curve 6.5-7.5 ticks higher.

- The short sterling strip had already been moving higher on headlines that a

Brexit deal was not close but the ECB announcement has pulled the strip higher

still. Whites are unch to 2.5 ticks higher, Reds 3.5 to 5.5 ticks higher, Greens

6 to 6.5 ticks higher and Blues 7 ticks higher.

- Eurodollars have seen similar, but smaller, moves. Whites unch to 2.5 ticks

higher, Reds up 3.5-5 ticks with Greens/ Blues 4.5-5 ticks higher on the day.