/STIR: Most Of Dovish Impetus Holds Post-Lagarde

Little to really counter the initial “dovish” FI reaction to the ECB press conference, despite President Lagarde suggesting that we should not be overly focused on what is deleted or what stays in the post-meeting statement, as there are some key statements that they want to keep as they underline the backbone (of policy). She notes that the Bank is trying to be a little simpler in expression, using fewer words "to be more normal."

• Tweaks re: the inflation wording in the statement, rhetoric re: wage dynamics, a lack of meaningful pushback surrounding the market pricing of ECB rate cuts and the totality of the U.S data have made their presence felt post-decision.
• Bunds futures are a little shy of session bests after showing as high as 134.56, with German yields 3-8bp lower on the day, bull steepening. 2s10s ticks back towards early ’24 highs.
• Peripheral spreads have tightened by a few bp, more than reversing any early widening impulses. Lagarde would not comment on spreads directly but noted that the euro area inherently has heterogeneity and divergences. She tried to assure that all central bank Governors have in mind both their country but also the whole euro area and set policy in response to the whole euro area.
• Dec ’24 ECB-dated OIS falls by ~12bp vs. pre-statement levels, ~2bp off dovish press conference extremes. More to come on ECB pricing shortly.