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BoE / ECB Peak Hike Pricing Edges Higher, Shrugging Off US ISM Data


ECB and BoE peak hike pricing edged up slightly Monday, recovering from a 2bp drop upon the release of soft US ISM Services data at 1500UK time to finish higher. In contrast, European data was relatively uneventful, with mostly weaker revisions to May prelim Services/Composite PMIs, and softer-than-expected prints for Italy and Spain Services.

  • ECB terminal depo Rate pricing +2.6bp to 3.79% (54bp of further hikes left in the cycle): ECB speakers didn't have much impact on pricing. Though weekend comments by Italy's Visco portended a dovish tone, a European Parliament appearance by ECB's Lagarde brought little new commentary, with Nagel and Vujcic sounding hawkish-leaning notes. A 25bp hike remains the core scenario for June (23.5bp priced).
  • BoE terminal Bank Rate pricing +2.6bp to 5.48% (98bp of further hikes left in the cycle): With no pertinent UK data or BoE speakers Monday, hike pricing continued to bounce from the correction late last week, for the biggest single-day rise in terminal expectations since May 25's +18bp. Markets continue to price in a decent chance of a 50bp hike in June (~24% priced).

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