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STIR: Light Hawkish Reaction To US Reciprocal Tariff Announcements

STIR
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Euribor futures are -1.0 to -3.0 ticks through the blues, as markets assess yesterday’s US Reciprocal tariff announcement. President Trump ordered his staff to research and propose country-by-country levies, with the result of the studies expected to be completed by April 1. The EU is expected to be targeted by this policy, with Trump’s team launching complaints against the EU’s VAT policy. The delay between announcement and implementation reduces some immediate growth risks and adds scope for negotiation (likely driving the light hawkish reaction), but uncertainty remains high.

  • ECB-dated OIS price 80bps of easing through year-end, ~1.5bps more hawkish than yesterday’s close and down from ~90bps earlier this week.
  • The second estimate of Eurozone Q4 GDP headlines today’s regional calendar and is expected to be unchanged at 0.0% Q/Q (below the ECB’s latest projection of 0.2%).
  • This release will include an initial estimate of quarterly employment growth and  - more importantly - real productivity per employee. The ECB projects employment growth at 0.1% Q/Q and productivity at 0.8% Y/Y.  

 

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Euribor futures are -1.0 to -3.0 ticks through the blues, as markets assess yesterday’s US Reciprocal tariff announcement. President Trump ordered his staff to research and propose country-by-country levies, with the result of the studies expected to be completed by April 1. The EU is expected to be targeted by this policy, with Trump’s team launching complaints against the EU’s VAT policy. The delay between announcement and implementation reduces some immediate growth risks and adds scope for negotiation (likely driving the light hawkish reaction), but uncertainty remains high.

  • ECB-dated OIS price 80bps of easing through year-end, ~1.5bps more hawkish than yesterday’s close and down from ~90bps earlier this week.
  • The second estimate of Eurozone Q4 GDP headlines today’s regional calendar and is expected to be unchanged at 0.0% Q/Q (below the ECB’s latest projection of 0.2%).
  • This release will include an initial estimate of quarterly employment growth and  - more importantly - real productivity per employee. The ECB projects employment growth at 0.1% Q/Q and productivity at 0.8% Y/Y.  

 

Keep reading...Show less