ECB Pricing Little Changed On The Day

ECB-dated OIS is little changed to start the week, with the liquid contracts generally operating within 1bp of Friday’s closing levels at typing. Recent price action in wider core global FI markets has kept any pay-side flow in check.

• ECB speak has seen Governing Council member Vasle warn against the high and resilient nature of core inflation.
• Elsewhere, the Bundesbank flagged a risk of slower than expected German GDP growth vs. previous expectations, while also outlining expectations for core inflation to remain very high over the summer, even with a moderation in general inflation potentially in play over the coming months.
• All in all, ECB-dated OIS prices a 25bp hike at next week’s meeting with virtual certainty, while a little over 42bp of cumulative tightening is showing through September. Beyond there, a terminal deposit rate just above 4.00% is priced, with those measures all operating in familiar territory.
• The latest BBG survey of economists indicated a central expectation for a terminal deposit rate of 4.00% to be reached in September.
• This afternoon will see Executive Board member Elderson & Governing Council Member Vujcic appear on a panel.