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STIR: ECB Rate Path Beyond Q1 Remains In Focus

STIR

Euribor futures have ticked higher alongside Bunds, now little changed through the blues versus yesterday’s settlement. Although US President Trump’s comments have sparked intraday volatility in markets through the week, overall moves in Euribor futures have been limited - ERZ5 has traded in a 5.5 tick range since Monday.

  • Expectations for 25bp ECB cuts in January and March remain well-anchored, with most focus on the likely path for policy rates in Q2. Dovish option structures in ERM5 have dominated flows this week.
  • ECB-dated OIS price 48bps of easing through March, 80bps through June and 98bps through year-end. Dec '25 implied rates are ~2bps more dovish than yesterday's close.
  • Yesterday evening, ECB’s Holzmann provided characteristically hawkish comments to Kronen Zeitung, suggesting the bank should “wait a bit more” before easing policy again. However, this rhetoric was offset by Holzmann's admission that he could be “persuaded if there are good arguments” for a January cut.
  • Today’s regional calendar is limited, with flash Eurozone consumer confidence due at 1500GMT/1600CET. ECB’s Escriva is scheduled to speak at 1030GMT.

 

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Euribor futures have ticked higher alongside Bunds, now little changed through the blues versus yesterday’s settlement. Although US President Trump’s comments have sparked intraday volatility in markets through the week, overall moves in Euribor futures have been limited - ERZ5 has traded in a 5.5 tick range since Monday.

  • Expectations for 25bp ECB cuts in January and March remain well-anchored, with most focus on the likely path for policy rates in Q2. Dovish option structures in ERM5 have dominated flows this week.
  • ECB-dated OIS price 48bps of easing through March, 80bps through June and 98bps through year-end. Dec '25 implied rates are ~2bps more dovish than yesterday's close.
  • Yesterday evening, ECB’s Holzmann provided characteristically hawkish comments to Kronen Zeitung, suggesting the bank should “wait a bit more” before easing policy again. However, this rhetoric was offset by Holzmann's admission that he could be “persuaded if there are good arguments” for a January cut.
  • Today’s regional calendar is limited, with flash Eurozone consumer confidence due at 1500GMT/1600CET. ECB’s Escriva is scheduled to speak at 1030GMT.

 

Keep reading...Show less