STIR: ECB Pricing Little Changed As Rehn Supports September Cut

Implied ECB cut pricing is little changed this morning, with Bank of Finland Governor Rehn’s endorsement of a September rate cut not deviating from current market expectations. ECB-dated OIS continue to fully price a cut at the September meeting, with 65ps of cuts priced through the remainder of this year.

• In a fireside chat after hours, Rehn noted that increased concerns around the Eurozone growth outlook reinforced the case for a September rate cut, “provided that disinflation is indeed on track”.
• His comments around the late July/early-August market volatility (i.e. “an overreaction of market forces in conditions of heightened uncertainty and thin market liquidity”) largely repeated previous remarks.
• Euribor futures are little changed through the blues.
• Today’s regional calendar includes final Eurozone July CPI, though Wednesday's FOMC minutes and Thursday’s regional releases (August flash PMIs and Q2 negotiated wages) will be more closely watched.