### POV: WILL FRONT END OF ECB FORWARD........>

EONIA: ### POV: WILL FRONT END OF ECB FORWARD DATED EONIA RE-PRICE?

- Eonia fixing has only fallen to -0.330% from Nov month end high of -0.241%,

clearly not dropping back towards 12-month average of -0.355% quickly, however,

ECB forward dated Eonia appears to suggest by June/July it will. Dec-17 ECB

forward dated Eonia is currently at -0.328%, while for Jun-18 rate falls to

-0.345%, while Dec-18 the rate is only -0.326% just above Dec-17.

- There are risks that the Eonia fixing may not fall as expected and remain

elevated as pointed out by my colleague last week due to low Eonia volume and

risk of outlying trades. Also adding to the risk is this weeks release of

updated ECB Staff forecasts and the possibility of growth and inflation being

revised higher.

- This could lead to greater chance that APP does not continue after Sep or at

the most tapered to zero by end of 2018, bringing forward the chance of the

first hike in the ECB deposit rate.

- If this does transpire it could put pressure on short-end of the ECB forward

dated Eonia curve.