OPTIONS: Expiries for Aug06 NY cut 1000ET (Source DTCC)

Citi maintain their receive July ECB-dated OIS recommendation based on tail risks surrounding U.S. tariffs.

• They also note that “ECB pricing for September looks light given benign HICP last week and euro strength “.

• Tariffs are the main focus for the EUR short-end this week, with progress on an EU-US agreement seemingly still limited. The President has announced that “tariff letters , and/or deals with various countries” will be delivered from 1200EST today (1700 BST).
• On Friday, EU Commission Sefcovic was threatened with 17% tariffs on EU agricultural exports, and according to the FT, EC President Von der Leyen has reached out to European leaders over the weekend to get guidance on whether she should accept a deal with some higher tariffs, which many favour, or raise the pressure on the US. The FT suggests the bloc is still divided on the best strategy.
• Euribor futures have been dragged lower by the latest weakness in core EGBS (see above). The strip is bear steeper, with futures flat to -2.5 ticks at typing.
• Last week, ECB-dated OIS starting pricing some chance of a terminal deposit rate as low as 1.50%, but expectations remain centred on one more 25bp cut September or December.
• This morning, Centeno provided similar comments to Econostream as he did to the MNI Policy Team last week. Nagel did not speak on monetary policy in his 0900BST speech. Last Friday, he said that there was no need to rush to another rate cut, even if inflation temporarily falls below 2%. The hawkish Holzmann speaks at 1400BST.
• The July Sentix survey is due at 0930BST, with May retail sales due at 1000BST. 

ECB's Nagel does not comment on monetary policy in today's speech at the Bank of Estonia in Tallinn - but gives some views on domestic economic conditions and potential reforms in Germany:

• "The Bundesbank’s June 2025 forecast indicates that the German economy is expected to more or less stagnate this year. Factoring in the stronger-than-expected first-quarter growth figures, a slight annual increase appears possible. However, this would still represent three consecutive years of minimal growth."
• He sees "three key areas where policymakers can enhance Germany’s growth potential" - Increasing labour supply (" increasing the working hours of part-time employees, especially women [...]  improve work incentives for recipients of the civic allowance"), efficiently transforming the energy sector ("implementing an effective carbon pricing system across all sectors and regions"), and reviving business dynamism ("reduce excessive bureaucratic burdens").