ECB Pricing Little Changed On The Day

ECB pricing has been caught between the early impulses surrounding Asia-Pac cheapening in core global bonds (JGB-driven), which was then limited/reversed by softer-than-expected German industrial production data.

• Still, the recent dovish extremes were not threatened on the back of the data and the strip has moved back to last print little changed on the day.
• That leaves ~143bp of ECB cuts priced for '24 on the whole.
• A quick reminder that a softening in tone from some of the hawkish wing of the ECB has been noted in recent days, which allowed markets to (briefly) price in 150bp of cuts for '24 on the whole yesterday.
• When it comes to the recent change in tact from some of the hawks, our policy team's latest piece notes that “the sharp deterioration of Germany’s economy has prompted a sudden about-face by hawks at the European Central Bank, which now looks likely to start cutting rates before the Federal Reserve, by as early as the first quarter and perhaps in 50-basis-point increments.” The piece took the form of an interview with prominent economist Charles Wyplosz.