Hawkish Move In EUR STIR On CPI, ~57bp Of '24 ECB Cuts Priced

The early hawkish move in EUR STIRs extends as the upside risks to the Eurozone CPI data crystalise (see earlier data reaction bullet for greater details), before a slight moderation from knee-jerk extremes.

• Euribor futures are 1.0-4.5bp softer on the day.
• While immediate ECB meeting pricing is little changed (~24bp of easing showing for June & ~27bp for July), December ECB pricing now shows ~57bp of cuts after briefly touching ~55bp of cuts post-data.
• That leaves ~4bp fewer cuts priced through year end when compared to yesterday’s close.
• Zooming out, year-end ECB pricing is moving back towards the May extremes, which protects the late Feb ’24 hawkish extreme.
• The idea of back-to-back ECB rate cuts has lost steam with most of the recent rounds of ECB-speak playing down the need to pre-commit to such action.
• This data further plays into the recent market.
• Various MNI policy team pieces and this week's MNI Connect event with ECB GC member Kazaks have already contributed to this narrative.