ECB: Accounts Highlight Optimal MonPol Will Depend on Trade Negotiations
May-22 11:35
ECB meeting accounts here: https://www.ecb.europa.eu/press/accounts/2025/html/ecb.mg250522~31b2c664d4.en.html
The word 'Tariff' mentioned 44 times in the meeting accounts - the accounts highlight: "it was argued that the optimal monetary policy response depended on the outcome of tariff negotiations, including the scope of the tariffs and the extent of potential retaliation"
- On policy restrictiveness, they write that "it was argued that cutting interest rates further could no longer be justified by the intention to return to neutral territory since, by various measures, monetary policy was no longer restrictive."
- And on communications strategy: "members noted that it was time to remove the phrase “our monetary policy is becoming meaningfully less restrictive” from the monetary policy statement.
- "In the present conditions, dropping the sentence avoided the perception that the neutral level of interest rates was the end point of the current cycle, which was not necessarily the case."
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSY FUTURES: BLOCK: Jun'25 5Y Buy
Apr-22 11:35
- +6,500 FVM5 108-07.25, buy through 108-07 post time offer at 0714:53ET, DV01 $416,000. The 5Y contract trades 108-07.25 last (-4.25)
FOREX: Latest Analyst Views on US Dollar
Apr-22 11:33
- *CIBC highlight that concerns over the Fed’s independence, Trump tariffs, and heightened uncertainty into earnings season has the market withdrawing capital from the US. They point out the DXY no longer sees haven demand which they believe can persist for some time. CIBC remain sellers of any near-term appreciation in the greenback with their favourite trades being long EUR/USD on dips towards the 1.14 level, and being short USD/JPY on rallies towards 142.
- *MUFG note the triple selling of the US dollar, US bonds and US equities highlights the further undermining of investor confidence in US assets. It fits with their view that the risk premium that has been priced into the USD since the announcement of reciprocal tariff plans is unlikely to diminish over the near-term. The topic of Fed independence under Trump’s presidency is not new but his comments last week were the clearest yet on how unhappy Trump is, leaving the greenback vulnerable to further S-T weakness.
- *SocGen say it’s hard to avoid the conclusion that imposing draconian import tariffs on goods which have no easy domestic substitutes in the US, will be inflationary (and ultimately, bad for growth). Added to political influence over the Fed and unsustainably vast international investment imbalances, and we have a recipe for a significant dollar fall, according to SG.
- Positioning, speed of movement, the lack of attraction of most of the alternative currencies means it won’t happen in a straight line. However, SG highlight this is the biggest USD short against the euro and yen, and suggest the dollar should be sold on rallies.
EURJPY: BofA: JPY's Rise More Fragile Than EUR's
Apr-22 11:21
Bank of America note that “both JPY and EUR have gained ~12% against USD year-to-date as the market seeks alternatives to the USD.”
- However, they think “underlying dynamics differ and JPY's rise looks more fragile than EUR's: 1) JPY's rise has accompanied a bigger rise in speculative positioning and increasing focus on a potential U.S.-Japan currency deal; 2) EUR's rise has been more persistent than JPY's across market regimes; 3) EUR's rise has been supported by an idiosyncratic story of German fiscal expansion; 4) JPY's rise has accompanied diminishing market focus on Bank of Japan rate hikes”.
Related bullets
Related by topic
EUR/USD
Bunds
Germany
Euribor
European Central Bank
Schatz
Bobl
