EURIBOR OPTIONS: Call Spread Buyer

March ECB implied hike pricing rose from session lows of 33bp to just under 38bp after MNI's sources piece "MNI SOURCES: ECB Clings To 50Bp Hike Plan Amid Market Turmoil". That pricing is still 8bp lower on the day.

• A subsequent Bloomberg article carried a headline suggesting a more dovish tilt ("ECB’s Hawkish Plans Set to Face Bolder Opposition on SVB Fallout"), but the content was aligned with MNI's reporting, including 50bp remaining the baseline view for the March decision.

EUR/USD relatively unmoved on BBG ECB sources story, but the pair holds close to best levels of the session and first resistance at this morning's 1.0737.

The BBG piece writes that:

• The ECB's plans for more big interest-rate hikes are set to meet more opposition this week after the collapse of Silicon Valley Bank, according to officials with knowledge of the matter.
• Dovish policymakers are likely to argue that the economic environment has shifted and that more caution is warranted, the people said, declining to be identified because such discussions are confidential.

Comments from Eurogroup meeting of eurozone finance ministers taking place in Brussels come out in post-meeting statement. Eurogroup: "While uncertainty surrounding the outlook, notably in relation to geopolitical and energy related factors, remains elevated, risks to growth appear more balanced than previously."

• "We agree that over 2023-24, prudent fiscal policies should aim at ensuring medium-term debt sustainability, while raising potential growth in a sustainable manner and addressing the green and digital transitions and resilience objectives through investment and reforms."
• "Fiscal policy will help to ensure the stability of the euro area economy and facilitate the effective transmission of monetary policy in a high inflation environment. In light of economic prospects and in a context of high inflation and tighter financing conditions, we reiterate that broad-based fiscal stimulus to aggregate demand is not warranted. "
• "Given the strong spill-overs in energy markets and for the euro area economies, we will coordinate our measures to preserve the level playing field and the integrity of the single market. Our measures so far have mitigated the initial excessive impact of the energy price shock on businesses and consumers, however, the fiscal costs weigh on public finances."