Euribor & Bund ASWs Look Through Latest Sources Piece Covering Bank Remuneration

Nothing in the way of tangible lasting movement in German ASWs nor Euribor on the back of the RTRS sources piece which suggested that “European Central Bank policymakers are planning a springtime push to cut interest payments made to commercial banks, in part to recoup some of the costs associated with a decade worth of stimulus”.

• The piece also noted that “some policymakers have also been pushing for an increase in the asset pool, known as the minimum reserve ratio and roughly equivalent to 1% of deposits... But the ECB rejected the proposal in July, partly on resistance from its Executive Board. Still, the battle is not over and proponents are looking to make a fresh push to raise the ratio next spring, when the ECB reviews its operational framework… But the sources say the ECB's board - including Isabel Schnabel, who is in charge of market operations - has not softened its opposition to the change, so any proposal faces an uphill battle.”
• The apparent high-level opposition to any MRR move has probably limited feed through to Euribor/German ASWs, which operate a little off their respective session highs as core globsl FI now sits a little shy of best levels as equities recover from lows.
• Note that Bobl, Bund & Buxl ASWs did tick to fresh session highs on the initial RTRS headlines, before moderating as the story was digested and core global FI moved away from best levels.