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STIR: Year-end ECB Implied Rates 3bps More Hawkish Since March Rate Decision

STIR
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ECB-dated OIS price 42bps of easing through year-end, having digested the March ECB decision and the first post-meeting sources piece from Reuters ~30 mins ago. That’s 3bps more hawkish than prior to the rate decision, but unchanged compared to just before the press conference started.

  • As such, the most material new input for ECB rate expectations coming out of the decision appears to be the reference to policy as “meaningfully less restrictive”. This was underscored in the press conference, with President Lagarde not labelling the direction of travel for rates as “clear”.
  • OIS have moved marginally more dovish since the Reuters piece was released. Although sources note a pause in April is possible, there still appears to be appetite for further cuts from the current 2.50% deposit rate.
  • OIS price 11bps of easing through the April decision, with 27bps priced through June.
  • As expected, more clarification on US trade barriers and increased German/EU fiscal spending remains key to the macroeconomic and rate outlook.
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ECB-dated OIS price 42bps of easing through year-end, having digested the March ECB decision and the first post-meeting sources piece from Reuters ~30 mins ago. That’s 3bps more hawkish than prior to the rate decision, but unchanged compared to just before the press conference started.

  • As such, the most material new input for ECB rate expectations coming out of the decision appears to be the reference to policy as “meaningfully less restrictive”. This was underscored in the press conference, with President Lagarde not labelling the direction of travel for rates as “clear”.
  • OIS have moved marginally more dovish since the Reuters piece was released. Although sources note a pause in April is possible, there still appears to be appetite for further cuts from the current 2.50% deposit rate.
  • OIS price 11bps of easing through the April decision, with 27bps priced through June.
  • As expected, more clarification on US trade barriers and increased German/EU fiscal spending remains key to the macroeconomic and rate outlook.
image