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Unlike Europe, US 2022 Rate Outlook Largely Shrugs Off Ukraine


European rate hike pricing has faded more quickly than in the US since the Ukraine-Russia crisis started escalating.

  • On Feb 11 the market closed pricing 52bp of 2022 ECB hikes over the rest of the year; US 155bp; UK 154bp.
  • Today, markets continue to price in a robust hiking cycle in the US at ~154bp by the Dec FOMC. While that's downshifted to ~140bp for the BoE, and ~36bp for the ECB.
  • UK hike pricing is down ~14bp since then. Eurozone pricing is ~16bp lower.
  • This relative divergence has despite strong Feb PMI data in Europe this week, a further suggestion geopolitics are overshadowing macro. Arguably a decisive Ukraine-Russia de-escalation would upwardly impact ECB (and to a lesser extent, BoE) 2022 rate pricing more than the US where so far it's been largely shrugged off.

OIS Implied By Dec 2022 Policy MeetingsSource: BBG, MNI

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