STIR: 57bps of ECB Cuts Priced Through Dec; Tariffs To Dictate M-T Inflation
ECB-dated OIS continue to price 57bps of easing through year-end, little changed from yesterday’s close. Friday’s flash inflation data from Spain, Germany and Italy presents near-term event risk for EUR STIRs, particularly after the soft reading from France yesterday. However, ECB Chief Economist Lane re-iterated yesterday that medium term inflation will be dictated by where US/EU tariff rates end up, keeping broader focus on trade developments.
- A 25bp cut remains fully priced through June, with 32bps of cumulative easing priced through July.
- Euribor futures are biased slightly lower through the blues, tracking core FI markets after a soft long-end JGB auction overnight.
- The ECB’s April consumer expectation survey is due at 0900BST. Consensus sees 3-year expectations steady at 2.5%, with 1-year expectations expected to ease a touch to 2.8% (vs 2.9% prior).
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Jun-25 | 1.924 | -24.8 |
| Jul-25 | 1.848 | -32.4 |
| Sep-25 | 1.724 | -44.8 |
| Oct-25 | 1.678 | -49.4 |
| Dec-25 | 1.605 | -56.7 |
| Feb-26 | 1.583 | -58.9 |
| Mar-26 | 1.569 | -60.3 |
| Apr-26 | 1.579 | -59.3 |
| Source: MNI/Bloomberg. | ||
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GILTS: Resistance In Futures Holds
While gilts initially trade lower, buyers quickly emerge, leaving the space little changed vs. late Friday levels.
- Broader core global FI markets trade weaker after U.S. Treasury Secretary Bessent pointed to trade talks moving in the right direction, particularly with Asia.
- Impending supply in Europe also weighs on EGBs.
- Futures as low as 93.16 before a bounce to 93.33. Contract last ~93.25.
- The recent bullish technical theme remains intact. Initial resistance located at Friday’s high (93.34), follow by a Fibonacci retracement level at 93.44.
- Initial support still located at the 20-day EMA (92.22 today).
- Yields little changed to 1bp lower, modest flattening bias to start the week.
- Initial support in 10s (4.460%) remains untested.
- GBP STIRs still trading around levels we flagged ahead of the gilt open, with just under 90bp of BoE cuts priced in through year-end.
- Final manufacturing PMI data (Thursday) headlines a limited domestic data calendar this week. BoEspeak from Ramsden (Tuesday) & Lombardelli (Wednesday) will also be eyed.
- On the supply front, the DMO will come to market with 30-Year (Tuesday) & 3-Year (Wednesday) paper this week.
SILVER TECHS: Holding On To The Bulk Of Its Recent Gains
- RES 4: $36.000 - Round number resistance
- RES 3: $34.903 - High Oct 23 ‘24 and the bull trigger
- RES 2: $34.590 - High Mar 28
- RES 1: $33.686 - High APr 25
- PRICE: $32.916 @ 08:14 BST Apr 28
- SUP 1: $32.087 - Low Apr 17
- SUP 2: $30.577/28.351 - Low Apr 10 / 7 and the bear trigger
- SUP 3: $27.686 - Low Sep 6 ‘24
- SUP 4: $27.180 - Low Aug 14 ‘24
A strong rally in Silver last Wednesday reinforces the current bullish theme and the metal is holding on to the bulk of its latest gains. Price has cleared $33.117, 76.4% of the Mar 28 - Apr 7 bear leg. This paves the way for a climb towards $34.590, the Mar 28 high. On the downside, initial firm support to watch has been defined at $32.087, the Apr 17 low. A break of this level would undermine the bull cycle and highlight a potential reversal.
NORWAY: Bankruptcies Spike As High Rates Weigh; Focus On May 8 NB Guidance
Norwegian bankruptcies rose 22.5% Y/Y in the four quarters to Q1 2025, a sign that high interest rates are weighing on mainland activity and employment. Markets price almost 20bps of easing through the June decision, placing focus on whether any guidance for a cut will be provided on May 8.
- A reminder that in her April 8 speech, Governor Wolden-Bache noted that “considerable weight shall be given to employment – also at times when inflation deviates significantly from the target”.
- Against this backdrop, hard labour market data has shown some signs of softening but continues to hold up reasonably well overall. The LFS trend unemployment rate was 4.1% in March, steady against February’s 2-tenth upwardly revised reading.
- Employment growth was -0.8% M/M (vs -0.1% prior), corresponding to a 3m/3m rate of 0.1% (vs -0.4% prior). The Q1 Regional Network Survey indicated Q1 employment growth at 0.2%.
