Euribor Futures Firmer As Powell Less Hawkish Than Expected

Euribor futures are -0.5 to +5.5 ticks through the blues with reds outperforming, as Europe returns after yesterday’s holiday.

• Fed Chair Powell came across as less hawkish than expected at yesterday’s FOMC press conference, stating that further Fed rate hikes were unlikely.
• However, the Fed cited a lack of progress in inflation returning to target, prompting a limited reaction in ECB-dated OIS at the open.
• The decision of the size of the Fed’s QT taper also helped core global FI markets to rally.
• OIS continue to price an ~80% chance of a June cut, while 64bps of easing are priced through the remainder of ’24 (vs 62bps at Tuesday’s close).
• Yesterday evening, Bank of Spain Governor de Cos reaffirmed his confidence in the Eurozone’s path to 2% inflation and the need to cut rates in June.
• Eurozone April manufacturing PMIs are due this morning. Final releases will come from Germany, France and the Eurozone after a contractionary set of flash estimates last week.
• ECB Chief Economist Lane speaks at Stanford University today at 21:15 BST, with the text to be made available on the ECB’s website.