STIR
Euribor futures have stabilised alongside short-end bonds over the last few hours, but remain -2.0 to -5.0 ticks through the blues. Stronger-than-expected German industrial production data weighed earlier this morning, helping to set the tone for the session.
- ERZ5 is -4.0 ticks at 97.925, consolidating below the trendline drawn from the June ’24 low, which was breached last week. Support remains at the November low of 97.8550.
- The implied yield of ERZ5 (corresponding to the Euribor-implied terminal rate) is thus 2.075%, up from 2.010% last Friday and 1.900% on December 23.
- Hawkish repricing since Christmas has been multi-faceted. Upticks in crude oil and natural gas were important drivers into year-end, but broader core FI-specific weakness has been more dominant since (outweighing the impact of natural gas’ sharp reversal from multi-month highs).
- Note that in an interview with Corriere this morning, ECB Executive Board member Cipollone said that the recent surge in natural gas prices should have relatively little impact on ECB inflation projections, with the December outlook already assuming prices on average 25% higher in 2025 than over the previous 12 months.
- Although early national December flash inflation prints initially pointed to upside risks for the Eurozone-wide release, in the end the data met consensus expectations. See our Eurozone inflation insight publication for more.
209 words