STIR: Soft German PPI Has Little Impact On Euribor

Euribor futures are -0.5 to -1.5 through the blues, sticking to a tight range.

• German PPI was a touch below consensus on a monthly and annual basis but had little market impact.
• ECB-dated OIS contracts hover close to May’s least dovish extremes, with 66bps of easing priced through the remainder of this year.
• The preliminary eurozone Q1 labour cost index may garner some interest this morning, ahead of Thursday’s flash PMI and negotiated wages releases.
• Labour cost data (and the extent to which it feeds into unit labour costs) had previously been eyed as a key barometer when it came to timing the start the of the ECB’s cutting cycle.
• The Bank’s heavy guidance towards a June cut has reduced the immediate impact of the data from a policy perspective but expect related readings to feed into post-June policy discussions.
• Elsewhere, ECB President Lagarde will appear at 0900BST. Note that the setting may limit the scope for monetary policy discussions. Lagarde and German Finance Minister Lindner will award US Treasury Secretary Yellen an honorary doctorate.