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STIR: End-2025 ECB Implied Rates 6bps Higher Post Fed Decision

STIR
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Spillover from yesterday’s hawkish-leaning Fed decision sees Euribor futures -2.0 to 6.5 ticks through the blues, though futures have moved away from session lows at typing. ERZ5 is 5.5 ticks lower at 98.075, with support at 98.040 (Nov 20 low) holding.

  • Not only were the FOMC’s new rate and inflation projections raised more than expected, the Statement was more cautious, and there was even a surprise dissent against the well anticipated 25bp rate cut.
  • End-2025 ECB implied rates are 6bps above yesterday’s close, with OIS now pricing 114bps of easing through the end of next year. The hawkish-leaning National Bank of Belgium Governor Wunsch noted yesterday that he was comfortable with market pricing of four more 25bp cuts through 2025 at this stage.
  • 25bp cuts remain fully priced through the January and March meetings, with 23bps of sequential easing also priced through April.
  • Today’s regional calendar does not include any tier 1 data, leaving focus on today’s global central bank decisions (most notable the BoE at 1200GMT) and US data. 

 

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Spillover from yesterday’s hawkish-leaning Fed decision sees Euribor futures -2.0 to 6.5 ticks through the blues, though futures have moved away from session lows at typing. ERZ5 is 5.5 ticks lower at 98.075, with support at 98.040 (Nov 20 low) holding.

  • Not only were the FOMC’s new rate and inflation projections raised more than expected, the Statement was more cautious, and there was even a surprise dissent against the well anticipated 25bp rate cut.
  • End-2025 ECB implied rates are 6bps above yesterday’s close, with OIS now pricing 114bps of easing through the end of next year. The hawkish-leaning National Bank of Belgium Governor Wunsch noted yesterday that he was comfortable with market pricing of four more 25bp cuts through 2025 at this stage.
  • 25bp cuts remain fully priced through the January and March meetings, with 23bps of sequential easing also priced through April.
  • Today’s regional calendar does not include any tier 1 data, leaving focus on today’s global central bank decisions (most notable the BoE at 1200GMT) and US data. 

 

Keep reading...Show less