Schnabel Allows Bid To Develop Further

A step down in hawkishness from ECB’s Schnabel supports EGBS, as he notes that “under this data-dependent approach, we cannot predict where the peak rate is going to be, or for how long rates will have to be held at restrictive levels. We can also not commit to future actions, meaning we cannot trade off a need for a further tightening of monetary policy today against a promise to hold rates at a certain level for longer.”

• Elsewhere, she flagged a visible moderation in economic activity, alongside stubbornly high price pressures.
• Bunds move back towards yesterday’s highs.
• The major German cash benchmarks see 3.5-4.5bp of richening, as the front end leads the bid, driven by a downtick in ECB-dated OIS pricing.
• Any weakness surrounding the firmer than expected French CPI data was limited and short-lived.