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European Hike Pricing Retreats On Weak US Data

STIR

ECB and BoE hike pricing have pulled back in the wake of softer US wage data and the very poor ISM Services reading.

  • Just 109bp of further BoE hikes are now seen in this cycle - vs 123bp pre-US Payrolls. The pullback in cumulative ECB hike pricing is less pronounced, to 142bp vs 149bp seen pre-Payrolls.
  • By comparison, just 59bp of further Fed hikes are now priced, vs close to 70bp pre-payrolls.
  • Near-term hike prospects are a little softer but remain largely unchanged (48+bp for Feb ECB, and 43+bp for Feb BoE, both off 2-3bp - vs a 5bp reduction for FOMC Feb pricing since pre-payrolls).

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