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US TSYS: Short End Off Lows Amid ECB Rate Cut Hopes

US TSYS
USEquitiesNorth AmericaBulletGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets
  • Treasuries are running weaker but off midday lows after the bell amid ongoing speculation over forward ECB rate cut speculation. Rates traded weaker overnight after ECB officials saw market pricing of appr six consecutive cuts as overly aggressive.
  • Bonds bounced briefly after Bank of Portugal Governor Centeno suggested a 50bp ECB cut was possible at upcoming meetings.
  • Treasuries rebounded with Euribor after Bank of France Governor Francoise Villeroy said Tuesday that ECB rates should not be restrictive next year if the growth outlook remains sluggish and inflation is sustainably at the bank's target of 2%.
  • "On our terminal rate, it’s obviously too early to tell. However if we are next year sustainably at 2% inflation, and with still a sluggish growth outlook in Europe, there won’t be any reasons for our monetary policy to remain restrictive, and for our rates to be above the neutral rate of interest", he said in New York.
  • The Richmond Fed Manufacturing Survey composite manufacturing index rose to -14 in October, still indicating "slow" activity (per the survey) albeit up from -21 in September and a little stronger than the -14 expected, with shipments, new orders and employment all improving on the month.
  • Current projected cuts recede vs. late Monday levels (*): Nov'24 cumulative -23.0bp (-22.0bp), Dec'24 -41.4bp (-40.5bp), Jan'25 -58.6bp (-58.1bp).
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  • Treasuries are running weaker but off midday lows after the bell amid ongoing speculation over forward ECB rate cut speculation. Rates traded weaker overnight after ECB officials saw market pricing of appr six consecutive cuts as overly aggressive.
  • Bonds bounced briefly after Bank of Portugal Governor Centeno suggested a 50bp ECB cut was possible at upcoming meetings.
  • Treasuries rebounded with Euribor after Bank of France Governor Francoise Villeroy said Tuesday that ECB rates should not be restrictive next year if the growth outlook remains sluggish and inflation is sustainably at the bank's target of 2%.
  • "On our terminal rate, it’s obviously too early to tell. However if we are next year sustainably at 2% inflation, and with still a sluggish growth outlook in Europe, there won’t be any reasons for our monetary policy to remain restrictive, and for our rates to be above the neutral rate of interest", he said in New York.
  • The Richmond Fed Manufacturing Survey composite manufacturing index rose to -14 in October, still indicating "slow" activity (per the survey) albeit up from -21 in September and a little stronger than the -14 expected, with shipments, new orders and employment all improving on the month.
  • Current projected cuts recede vs. late Monday levels (*): Nov'24 cumulative -23.0bp (-22.0bp), Dec'24 -41.4bp (-40.5bp), Jan'25 -58.6bp (-58.1bp).