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STIR: Prospect of 50bp Fed Cut Keeps Euribor Underpinned

STIR
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The prospect of a 50bp Fed cut tomorrow has kept Euribor futures underpinned, currently little changed versus yesterday’s settlement. However, futures generally remain just short of last week’s multi-month highs, after President Lagarde struck a somewhat cautious tone at the ECB’s September meeting.

  • This has allowed ERZ4 spreads to move a little above last week’s cycle lows.
  • Yesterday evening, Latvian CB Governor Kazaks re-iterated his expectation for rates to be cut further. He had already noted last Friday that the bar to an October cut was quite high, though.
  • ECB-dated OIS continue to price 7bps of easing through the October meeting and 37bps of cuts through year-end.
  • Today’s calendar includes the September ZEW survey in Germany, though US retail sales / industrial production will be the main focus ahead of tomorrow’s Fed decision.
  • ECB’s Simkus is also due to speak at 0800BST/0900CET. 

 

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The prospect of a 50bp Fed cut tomorrow has kept Euribor futures underpinned, currently little changed versus yesterday’s settlement. However, futures generally remain just short of last week’s multi-month highs, after President Lagarde struck a somewhat cautious tone at the ECB’s September meeting.

  • This has allowed ERZ4 spreads to move a little above last week’s cycle lows.
  • Yesterday evening, Latvian CB Governor Kazaks re-iterated his expectation for rates to be cut further. He had already noted last Friday that the bar to an October cut was quite high, though.
  • ECB-dated OIS continue to price 7bps of easing through the October meeting and 37bps of cuts through year-end.
  • Today’s calendar includes the September ZEW survey in Germany, though US retail sales / industrial production will be the main focus ahead of tomorrow’s Fed decision.
  • ECB’s Simkus is also due to speak at 0800BST/0900CET. 

 

Keep reading...Show less