STIR: Euribor Futures Eye May 31 Lows As Political Uncertainty Dominates

Euribor futures remain under pressure alongside core EGBs as this morning’s political uncertainty continues to dominate discussions. The strip is -1.0 to -6.5 ticks lower through the blues, with many contracts sitting just above the May 31 lows.

• ECB-dated OIS have seen a modest round of hawkish repricing as a result, with 31bps of cuts priced through the remainder of this year (vs 33bps this morning).
• Today’s ECB speak has not been market moving, with Governing Council members continuing to underscore the Bank’s cautious/data-dependent approach when it comes to the next move for rates.
• A reminder that the MNI Policy Team hosts a webcast with ECB Vice President de Guindos on Wednesday. Registration link here.
• When speaking with Spanish radio following last week’s rate decision, Guindos noted that there was “huge uncertainty on the economy”. As such, there will be interest in how much weight he applies to the latest Eurosystem macroeconomic projections in his decision making, in light of this uncertainty.
• Several ECB speakers are scheduled tomorrow, with Chief Economist Lane headlining at 1205BST. The data calendar is relatively sparse.