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STIR: Euribor Futures Off Overnight Highs As Markets Digest Trump Jawboning

STIR
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Euribor futures are flat to -1.0 ticks through the blues, having moved away from overnight highs alongside Bunds as markets digest US President Trump’s initial policy actions and verbal rhetoric. Although Trump did not impose any new tariffs following his inauguration, he re-iterated threats against Mexico and Canada and again called for the EU to buy more US energy to avoid future protectionist policies.

  • ECB-dated OIS are up to 1bp more dovish through ’25, with ~97.5bps of easing priced through year-end.
  • National Bank of Slovakia Governor Kazimir said that a January ECB rate cut is a “done deal” and that “three or four cuts in a row are feasible”. This comes across as quite dovish, with Kazimir usually considered a hawkish-leaning member of the GC.
  • He argued that the neutral rate was “probably closer to 2% than to 3%”, aligning with more dovish colleagues such as Villeroy. In December, Kazimir said  that “once we reach around 2.5%, we’ll start seriously considering the issue of the neutral rate, and whether we should shift from a restrictive policy to a more neutral or accommodative stance”.
  • The German ZEW survey is due at 1000GMT/1100CET, while the dovish Bank of Portugal Governor Centeno is scheduled to speak in a parliamentary hearing at 1100GMT.

 

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Euribor futures are flat to -1.0 ticks through the blues, having moved away from overnight highs alongside Bunds as markets digest US President Trump’s initial policy actions and verbal rhetoric. Although Trump did not impose any new tariffs following his inauguration, he re-iterated threats against Mexico and Canada and again called for the EU to buy more US energy to avoid future protectionist policies.

  • ECB-dated OIS are up to 1bp more dovish through ’25, with ~97.5bps of easing priced through year-end.
  • National Bank of Slovakia Governor Kazimir said that a January ECB rate cut is a “done deal” and that “three or four cuts in a row are feasible”. This comes across as quite dovish, with Kazimir usually considered a hawkish-leaning member of the GC.
  • He argued that the neutral rate was “probably closer to 2% than to 3%”, aligning with more dovish colleagues such as Villeroy. In December, Kazimir said  that “once we reach around 2.5%, we’ll start seriously considering the issue of the neutral rate, and whether we should shift from a restrictive policy to a more neutral or accommodative stance”.
  • The German ZEW survey is due at 1000GMT/1100CET, while the dovish Bank of Portugal Governor Centeno is scheduled to speak in a parliamentary hearing at 1100GMT.

 

Keep reading...Show less