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STIR: No Lasting Spillover From UK Retail Sales; 59bps of ECB Cuts Priced Throug

STIR
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Euribor futures are -0.5 to +1.5 through the blues.

  • There was no lasting impact from much softer-than-expected UK retail sales data.
  • German final Q1 GDP was also in line with the flash estimate at +0.2% Q/Q.
  • ECB-dated OIS contracts price 59bps of cuts through the remainder of this year, the shallowest implied cutting cycle seen year-to-date.
  • A 25bp cut is ~90% discounted come the end of the June meeting,
  • Looking slightly further out, a cumulative 26bps of easing is priced through the July meeting, with yesterday’s Q1 negotiated wages data providing the latest input that could facilitate a “wait and see” approach from the Bank.
  • There are several ECB speakers scheduled today (Schnabel, Vasle, Muller, Nagel, de Cos and Centeno).
  • Last week saw Schnabel note that a July cut was unlikely, while most other speakers have offered little guidance beyond June.
  • The regional data calendar is light today, with broader European focus on next week’s May flash inflation data.
Meeting DateESTR ECB-Dated OIS (%)Difference Vs. Current Effective ESTR Rate (bp)
Jun-243.683-22.9
Jul-243.655-25.7
Sep-243.506-40.6
Oct-243.446-46.6
Dec-243.320-59.2
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Euribor futures are -0.5 to +1.5 through the blues.

  • There was no lasting impact from much softer-than-expected UK retail sales data.
  • German final Q1 GDP was also in line with the flash estimate at +0.2% Q/Q.
  • ECB-dated OIS contracts price 59bps of cuts through the remainder of this year, the shallowest implied cutting cycle seen year-to-date.
  • A 25bp cut is ~90% discounted come the end of the June meeting,
  • Looking slightly further out, a cumulative 26bps of easing is priced through the July meeting, with yesterday’s Q1 negotiated wages data providing the latest input that could facilitate a “wait and see” approach from the Bank.
  • There are several ECB speakers scheduled today (Schnabel, Vasle, Muller, Nagel, de Cos and Centeno).
  • Last week saw Schnabel note that a July cut was unlikely, while most other speakers have offered little guidance beyond June.
  • The regional data calendar is light today, with broader European focus on next week’s May flash inflation data.
Meeting DateESTR ECB-Dated OIS (%)Difference Vs. Current Effective ESTR Rate (bp)
Jun-243.683-22.9
Jul-243.655-25.7
Sep-243.506-40.6
Oct-243.446-46.6
Dec-243.320-59.2