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STIR: Weak Nov Flash PMIs Add 9bps Of Cuts To End-2025 ECB Pricing

STIR
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Dovish repricing in EUR STIRs following the German and French flash PMIs. Weakness was particularly prevalent in the services components, a concerning signal given the importance of the services sector in supporting the Eurozone economy post-covid. Manufacturing conditions remain recessionary. ECB-speak in the coming days will be a key focus, to see if the PMIs have catalysed any shifts amongst the policymakers in favour of a 50bp December cut.

  • ECB-dated OIS now price 33.5bps of easing through the December meeting (i.e. a ~35% implied probability of a 50bp cut), up from ~29bps before the French PMI data.
  • Meanwhile, end-2025 implied cuts have increased to 148bps (vs 139bps pre-data).
  • Euribor futures are +5.5 to +8.0 ticks through the blues, with ERZ5 briefly piercing resistance at 98.175 (Oct 24, Nov 14 highs).
  • Dovish moves were likely exacerbated by pre-data positioning, with EUR STIRs and Bunds ticking lower heading into the French release.

 

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Dovish repricing in EUR STIRs following the German and French flash PMIs. Weakness was particularly prevalent in the services components, a concerning signal given the importance of the services sector in supporting the Eurozone economy post-covid. Manufacturing conditions remain recessionary. ECB-speak in the coming days will be a key focus, to see if the PMIs have catalysed any shifts amongst the policymakers in favour of a 50bp December cut.

  • ECB-dated OIS now price 33.5bps of easing through the December meeting (i.e. a ~35% implied probability of a 50bp cut), up from ~29bps before the French PMI data.
  • Meanwhile, end-2025 implied cuts have increased to 148bps (vs 139bps pre-data).
  • Euribor futures are +5.5 to +8.0 ticks through the blues, with ERZ5 briefly piercing resistance at 98.175 (Oct 24, Nov 14 highs).
  • Dovish moves were likely exacerbated by pre-data positioning, with EUR STIRs and Bunds ticking lower heading into the French release.

 

Keep reading...Show less