STIR: Hawkish Repricing In EUR STIRs Following UK CPI

The firmer-than-expected UK CPI reading promotes a hawkish repricing in EUR STIRs, with Euribor futures flat to -5.0 through the blues.

• The latest RBNZ decision had no tangible impact on EUR STIRs overnight.
• Late Tuesday saw ECB President Lagarde reiterate that a 25bps rate cut at the June meeting was likely, but she continued to align herself with the wider GC, not committing to a rate path beyond that gathering.
• Bundesbank President Nagel was a little more cautious, in line with his hawkish leanings, in warning against cutting rates “hastily” after June. Nagel noted that developments in wage growth appear to be headed in the right direction.
• ECB-dated OIS contracts price 65bps of easing through the remainder of 2024 (vs 69bps at yesterday’s close), while a 25bps June cut remains over 90% discounted.
• Today’s regional calendar is light, with focus on tomorrow’s May flash PMIs and Q1 ECB negotiated wages data.
• President Lagarde’s scheduled appearance at 0905BST is unlikely to be market moving, focusing on the effectiveness of capital markets in the EU.