Modest Pay-Side Flows In ECB-Dated OIS As ECB-Speak Pushes Back vs Rate Cut Pricing

The latest round of ECB pushback vs current market rate cut expectations prompts a modest round of pay-side flows in ECB-dated OIS contracts.

• Contracts now price 149bps of ECB rate cuts through 2024, down from ~152bps this morning.
• The first cut remains more than priced through the April meeting, despite comments from ECB's Lane over the weekend noting that the most meaningful data for rate cut discussions will only be available for the June gathering.
• Today, Holzmann and Nagel maintained their hawkish stances, with the former noting that cuts may not come at all in 2024 and the latter preferring to deliberate on cuts after the "summer break". Central Bank of Cyprus Governor Herodotou also weighed in, stating that current rate cut talk was premature.
• These comments come from a relatively wide range of historical stances on the historical dove-hawk spectrum, which could point to a degree of pre-emptive pre-blackout pushback (the pre-meeting blackout period goes into effect later this week).
• While off today's lowest levels, the Euribor strip remains -3.5 to -7.0 ticks through the blues, with the whites under the most pressure.