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Dovish ECB Repricing Supports

BONDS

Continued dovish repricing on the ECB strip, and related spill over, is the most obvious driver of the early rally in bonds this morning. ECB-dated OIS briefly priced 120bp of cuts for ’24 on the whole, which is a new cycle extreme.

  • We haven’t seen much in the way of overt drivers for the move.
  • Note that Goldman Sachs rolled forward their call for the first ECB rate cut to Q224 from Q324 last night.
  • ECB-dated OIS pricing shows ~13bp of cuts for the Mar ’24 meeting, tilting slightly in favour of a cut at that juncture. ~29bp of easing is discounted through the April ’24 decision.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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