STIR: Almost 150bps Of ECB Cuts Priced Through Dec 25, PMIs Headline Next Week

Euribor futures have moved off intraday lows alongside US counterparts, now -2.0 to +1.5 ticks through the blues. ECB-dated OIS are little changed today, with 145bps of cuts priced through December 2025 (vs 135bps at last week’s close). 

• ECB Executive Board member Cipollone struck an unsurprisingly dovish tone in arguing for further loosening of monetary policy, cautioning that the stronger-than-expected Q3 GDP print was boosted by events such as the Olympics.
• He warned that higher trade tariffs being implemented by the US could “significantly weigh on activity, especially in manufacturing, because of the impact on euro area confidence, exports and investment”.
• Meanwhile, Bank of Italy Governor Panetta referenced an ECB analysis whereby an increase in global trade fragmentation could reduce global growth by over 6%. President Lagarde has also drawn upon this study in recent speeches.
• Next week’s November Eurozone flash PMIs will incorporate post-election sentiment. The already-weak manufacturing component may be particularly sensitive to the threat of increased tariffs.
• Uncertainty stemming from the collapse of the German traffic light coalition may also factor into the PMI prints.
• Several Executive Board speeches are also scheduled next week, with de Guindos and Schnabel making appearances tomorrow.