Paying attention to European lockdown news

Last week saw STIR markets move higher globally, particularly as the Covid-19 situation Europe seems to have deteriorated with Austria entering into a lockdown and case numbers high across much of the Eurozone. Indeed, the short sterling strip underperformed the Euribor strip but outperformed the Eurodollar strip last week. These concerns outweighed the optimism towards the start of the week with short sterling's lows of the week seen around the open on Wednesday after some strong labour market data on the Tuesday was followed up by a higher than expected CPI print ahead of the market opening Wednesday. Markets still price a good chance of a 15bp December hike and rates by the end of 2022 are still close to 1.25% according to market pricing.