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STIR: ERZ5 Fully Unwinds post-FOMC Hawkish Repricing

STIR
BulletMarketsFixed Income BulletsForeign Exchange Bullets

ERZ5 has fully unwound Wednesday’s post-FOMC hawkish repricing, now +4.0 ticks today at 98.135. Meanwhile, ECB-dated OIS price 121bps of easing through the course of next year (vs ~113bps on Thursday morning).

  • Although the Fed looks set to adopt a more cautious approach to easing next year, the ECB remain committed to removing restriction against a backdrop of weak economic growth and trade policy uncertainty.
  • In a recent interview with the MNI Policy Team, the dovish Bank of Portugal Governor Centeno suggested there is agreement within the ECB’s Governing Council for continuing its easing cycle with gradual, 25-basis-point moves on its way to the neutral rate (which he sees between 1.5% and 2.0%).
  • More hawkish members of the GC have also advocated for a consistent pace of easing though, with National Bank of Belgium Governor Wunsch noting he was “comfortable” with pricing for rate cuts at each of the next four ECB gatherings.

 

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ERZ5 has fully unwound Wednesday’s post-FOMC hawkish repricing, now +4.0 ticks today at 98.135. Meanwhile, ECB-dated OIS price 121bps of easing through the course of next year (vs ~113bps on Thursday morning).

  • Although the Fed looks set to adopt a more cautious approach to easing next year, the ECB remain committed to removing restriction against a backdrop of weak economic growth and trade policy uncertainty.
  • In a recent interview with the MNI Policy Team, the dovish Bank of Portugal Governor Centeno suggested there is agreement within the ECB’s Governing Council for continuing its easing cycle with gradual, 25-basis-point moves on its way to the neutral rate (which he sees between 1.5% and 2.0%).
  • More hawkish members of the GC have also advocated for a consistent pace of easing though, with National Bank of Belgium Governor Wunsch noting he was “comfortable” with pricing for rate cuts at each of the next four ECB gatherings.

 

Keep reading...Show less