Flat Start For EUR STIRs, Just Under 70bp Of '24 ECB Cuts Priced

U.S. discussions with Israel may have (at least marginally) reduced the risk of further escalation in the Middle East, although that has been more impactful for crude oil and equity markets than core global FI.

• Euribor futures are essentially unchanged, while there has been little net movement in ECB-dated OIS, leaving 21.5bp of cuts showing through June and ~68bp of easing priced through year end.
• That pricing remains anchored towards the more hawkish end of the recent range, largely on the back of spill over from the hawkish Fed repricing seen in recent weeks.
• The ECB Governing Council continue to guide heavily towards a June cut, although there is a wide variety of opinions on policy expectations beyond that meeting. Some rate setters remain completely non-committal, underscoring data-dependence beyond June.
• Goldman Sachs have recommended receiving Sep ’24 ECB-dated OIS. They note that “the key tension in European fixed income remains that between the ECB's guidance towards easing and the impact on global duration from U.S. data strength. We recommend receiving the September ECB meeting, given the near-term meetings are likely better insulated against a further reassessment of the Fed path.”
• Monday’s regional data calendar is headlined by German (regional and national) and Spanish CPI data, ahead of tomorrow’s Eurozone reading.
• We are also set to hear from ECB’s de Cos, Lane & de Guindos.