MNI’s Latest ECB Sources Piece Factors In To Slight Hawkish Move In Markets

Our policy team’s latest sources piece notes that “European Central Bank policymakers are keen to ensure markets do not price in rate cuts prematurely and will continue to stress lingering upside risks to inflation in coming weeks even as policy looks set to remain unchanged in December and possibly for some months afterwards.”

• The timing of the story lines up with a 1-3bp hawkish move in EUR STIR markets, outside of the very front end, along with some wider pressure in bonds.
• Euribor futures run flat to 2.5bp lower through the blues, with the early rally more than reversed.
• ECB-dated OIS is also comfortably off dovish session extremes, generally running little changed to a touch firmer on the day.
• Note that typically hawkish comments from ECB’s Wunsch also crossed around that time, while firmer than expected U.S. housing data (albeit accompanied by negative revisions) will also be factoring in.