STIR: Thursday’s Data Releases Will Be Key For ECB Cut Pricing

The August flash PMIs and ECB Q2 negotiated wages (both Thursday) will provide the next major regional cues for markets in weighing the likely pace of the ECB’s easing cycle. Hawkish developments in one or both of those prints could prompt market pricing to tilt back towards 2x further 25bp cuts this year, which would be in line with Governing Council rhetoric over the past weeks.

• ECB-dated OIS have seen little net change through today, with 64bps of easing priced through the remainder of this year. 
• A 25bp cut remains fully priced for the September meeting, with an additional 13bps priced through October.
• Euribor futures are broadly unchanged through the blues, following wider core FI lower this afternoon.
• Bank of Finland’s Rehn is scheduled to speak from New York after hours.