Watch The Hawks

Worth keeping an eye on comments from the traditionally hawkish wing of the ECB today, with Governing Council members Nagel & Vasle set to speak. Elsewhere, chief economist Lane will provide the highest seniority when it comes to today’s rhetoric, while Vujcic will speak again today (Vujcic already stressed data- not date-dependence, while pushing back on the idea of a dovish ECB tilt via a BBG interview on Friday 26 Jan).

• This comes after a general softening in ECB pushback re: rate cuts (starting at President Lagarde’s post-meeting press conference), which allowed a 25bp rate cut to be fully priced come the end the April ’24 meeting (as of Monday).
• ECB speakers had previously focused on the “Summer” window, which would allow them to have updates re: wage data in hand before making any decisions on interest rates. Less focus on that data, and Lagarde’s language on inflation, wage and GDP growth dynamics, has seemingly bought the timeline for potential easing forwards.
• Firmer-than-expected Spanish CPI data has taken the edge off the dovish move, leaving ~23bp of cuts priced through the April meeting and ~143bp of cuts priced through ’24 on the whole.
• Capitulation/meaningful softening in rhetoric from the hawks appearing today would likely trigger fresh receiver-side flows.