Fundamentals Outweigh Source Reports When It Comes to ECB Pricing

ECB-dated OIS eases a touch today, running little changed to ~6bp lower across the liquid part of the strip.

• The softer than expected Italian CPI data (which has biased some Eurozone CPI forecasts lower) and the lack of meaningful liquidity strains seen in the latest ECB operations around the sizeable TLTRO repayment are outweighing any feedthrough this morning’s hawkish BBG ECB sources which looked at preliminary ideas from some of the more hawkish voices re: a swifter route for balance sheet reduction surrounding APP & PEPP holdings (see earlier bullets for more on that).
• ECB speakers from Sintra have generally stuck to their previously outlined views, with eyes on this afternoon’s 4-way panel between Messrs Powell, Lagarde, Bailey & Ueda.
• ~23bp of tightening is priced for next month’s ECB meeting, with a further ~25bp of cumulative tightening showing through year-end, leaving terminal pricing just below the 4.00% mark in deposit rate terms.