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STIR: 125bp Of Cuts Priced For Next 5 ECB Meetings

STIR
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EUR STIRs flat to a little more dovish this morning.

  • ECB-dated OIS sits around levels seen late Friday, showing 29bp of cuts for December, 92bp of cuts through March and 125bp of cuts through June.
  • On face value, that leaves 5x 25bp cuts fully discounted over the next 5 meetings, although a more granular inspection points to some pricing of the chance of 50bp steps over the next 3 meetings.
  • Euribor futures rally alongside Bunds, last 1.5-5.5 firmer.
  • The weekend saw ECB hawk Holzmann tell Kleine Zeitung that “as things currently stand, the possibility (of a rate cut in December) exists, there’s nothing at the moment that would speak against it, but that doesn’t mean that it will automatically happen.” No real surprise there, although he could have chosen to push back against market pricing of a 50bp move.
  • That came after ECB GC member Makhlouf reaffirmed the need for “careful pacing” of policy loosening late on Friday.
  • Tomorrow’s ZEW readings and Thursday’s Eurozone GDP prints headline this week’s regional data schedule, while ECB rhetoric will pick up from tomorrow. 

ECB Meeting

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EUR STIRs flat to a little more dovish this morning.

  • ECB-dated OIS sits around levels seen late Friday, showing 29bp of cuts for December, 92bp of cuts through March and 125bp of cuts through June.
  • On face value, that leaves 5x 25bp cuts fully discounted over the next 5 meetings, although a more granular inspection points to some pricing of the chance of 50bp steps over the next 3 meetings.
  • Euribor futures rally alongside Bunds, last 1.5-5.5 firmer.
  • The weekend saw ECB hawk Holzmann tell Kleine Zeitung that “as things currently stand, the possibility (of a rate cut in December) exists, there’s nothing at the moment that would speak against it, but that doesn’t mean that it will automatically happen.” No real surprise there, although he could have chosen to push back against market pricing of a 50bp move.
  • That came after ECB GC member Makhlouf reaffirmed the need for “careful pacing” of policy loosening late on Friday.
  • Tomorrow’s ZEW readings and Thursday’s Eurozone GDP prints headline this week’s regional data schedule, while ECB rhetoric will pick up from tomorrow. 

ECB Meeting

Keep reading...Show less