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ECB Hike Pricing Holds Up Post-US CPI, While BoE and Fed Slips

STIR

Interesting to see ECB hike pricing bounce all the way back from the post-US CPI lows, and then some: May ECB pricing is at a session high over 26bp (dipped to 25bp post-CPI), while October peak pricing fell as far as 8bp to 3.51% but is now back at 3.59%.

  • Note that in contrast, Fed and BoE hike pricing has only recovered about half of the post-CPI drop.
  • A theory is that an easier Fed path on diminishing US inflation (as opposed to risk-off considerations) mean risk assets strengthen and offer more room for the ECB to hit the brakes to combat high and sticky Euro area inflation.

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