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Euribor under pressure after Knot comments


It's a mixed morning for STIR futures.

  • SONIA and Euribor futures are both seeing little movement in Whites (if anything less priced in at the very front-end) but downward pressure focused around the Reds. The biggest mover is the Mar-23 Euribor future, following comments from Knot over the weekend that we could see a first 25bp rate rise in Q4-22 and a second in Q1-23. Indeed, markets are now pricing an even faster pace than this with 50bp of rate hikes fully priced by end-2022. This would bring the deposit rate to 0%. SONIA futures pricing has consolidated the five further 25bp hikes fully priced in for 2022 (Bank Rate to 1.75%) with 4 hikes fully priced by August.
  • The Eurodollar strip, however, has moved a bit higher, off the lows seen after the European close on Friday. For comparison with the Euribor strip, both are trading around the same levels that were seen at 15:30GMT on Friday.

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