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Wunsch Comments Hawkish As Expected; Lane Eyed At 1530GMT

STIR

Comments from ECB's Wunsch were unsurprisingly hawkish, and did not promote any persistent feed-through into ECB-dated OIS. Markets now await comments from Chief Economist Lane, who speaks at the Brookings Institution on "Disinflation in the euro area" at 1530GMT/1630CET.

  • Wunsch's comments echoed those he gave in December, pointing to the need to see wages move to a level that's structurally compatible with 2% inflation before embarking on an easing cycle.
  • Rate cut expectations have continued to moderate through the day, with global core FI and the Euribor strip under pressure.
  • There are 121bps of ECB easing priced through 2024 at typing (from 125bps this morning).
  • The Euribor strip is -1.0 to -5.5 ticks through the Blues, with Reds under the most pressure.
  • The sign-up link for Lane's webcast can be found here.

Meeting Date ESTR ECB-Dated OIS (%)Difference Vs. Current Effective ESTR Rate (bp)
Mar-243.883-2.5
Apr-243.770-13.8
Jun-243.533-37.6
Jul-243.315-59.3
Sep-243.076-83.2
Oct-242.893-101.6
Dec-242.694-121.4
Jan-252.550-135.8
Source: MNI/Bloomberg
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