Euribor Strip Firmer; Lagarde Notes Services Inflation Persistence

The Euribor strip is +1.5 to +5.0 ticks through the Blues, though contracts have drifted away from best levels registered in Asia hours. ECB-dated OIS contracts price 118bps of cuts through 2024, showing a slightly deeper easing cycle vs. yesterday afternoon (114bps).

• The weaker-than-expected UK activity data did not have much of an impact, with the strip largely tracking global core FI moves in the interim.
• A softer-than-expected run of Australian labour market and Japanese GDP data supported the wider core FI space in the Asia-Pac session.
• After yesterday's close, ECB's de Guindos said he was optimistic that inflation is on track to reach 2% after "some positive surprises" lately.
• Bundesbank's Nagel continued to stress caution, noting it may be worse for the economy to cut rates too early than too late.
• In a speech prepared for this morning's ECON hearing, ECB President Lagarde re-iterated the importance of wage pressures as a driver of inflation and acknowledged that services inflation "has shown signs of persistence." Her comments had little to no impact on the EUR short end.
• The remainder of today's docket sees appearances from Chief Economist Lane at an online seminar on "Monetary Policy and Banks' Business Strategies" (1200GMT/1300CET), while Governing Council members de Cos and Nagel also speak.