STIR: Hawkish EUR Rates Reaction To US Tariff Block; Uncertainty Remains High
The Court of International Trade’s judgement blocking a significant portion of US tariffs drives a hawkish reaction in EUR implied rates. ECB-dated OIS now price 53bps of easing through year-end, down from 56.5bps at yesterday’s close. A 25bp cut remains essentially fully priced for next week’s decision.
- Euribor futures are flat to -4.0 ticks through the blues. ERZ5 is at 98.23, a shade above last Friday’s 98.225 low.
- Hawkish impetus is limited by the fact the judgement does not cover sectoral tariffs on autos and steel/aluminium. The former is particularly important to EU trade with the US, and it’s worth remembering that sectoral tariffs on pharmaceutical products are also expected at some point.
- Naturally, the court ruling should not be considered set in stone. The US administration has already appealed the judgement, and there are avenues available for tariffs to be ratcheted higher in the meantime.
- One thing is for certain though - trade policy uncertainty remains extremely high. This will keep Eurozone growth risks tilted to the downside and keep the ECB leaning dovish.
- Yesterday evening, ECB’s Villeroy re-iterate that he sees more rate cuts in the “coming weeks” – that’s not a new view. The Governing Council should have entered its pre-meeting quiet period as of today.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Jun-25 | 1.928 | -24.4 |
| Jul-25 | 1.859 | -31.3 |
| Sep-25 | 1.754 | -41.8 |
| Oct-25 | 1.721 | -45.1 |
| Dec-25 | 1.644 | -52.8 |
| Feb-26 | 1.623 | -54.9 |
| Mar-26 | 1.615 | -55.7 |
| Apr-26 | 1.619 | -55.3 |
| Source: MNI/Bloomberg. | ||
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USD: A steady start in G10 FX
- G10 FX has been range bound and as noted for Bonds and Equities, there's very little changes across multi assets.
- The Dollar might be showing in the green and on the front foot against all G10s, but if we look at the three worst performing Currencies, the SEK, the CHF and the NZD, they are all trading well within Yesterday's range.
- Even the normally very Volatile Yen has traded in a 58 pips range as Market Participants turn their focus to the US JOLTS and Consumer Confidence Data to gauge the impact of the Tariff Policies later Today.
UK DMO UPDATE: Syndication Maturity Announcement On May 2
"The DMO will announce further details of the maturity area for the conventional gilt syndication [scheduled for the w/c May 19] at 7.30am on Friday 2 May 2025."
WTI TECHS: (M5) Gains Considered Corrective
- RES 4: $75.51 - High Jan 15 and a key resistance
- RES 3: $72.56 - High Feb 20
- RES 2: $71.76 - High Apr 2 and key resistance
- RES 1: $65.59 - 50-day EMA
- PRICE: $61.45 @ 07:18 BST Apr 29
- SUP 1: $58.29/54.67 - Low Apr 10 / 9 and the bear trigger
- SUP 2: $53.72 - 2.236 proj of the Feb 20 - Mar 5 - Apr 2 price swing
- SUP 3: $52.54 - 2.382 proj of the Jan 15 - Feb 4 - 11 price swing
- SUP 4: $50.00 - Psychological round number
A bearish theme in WTI futures remains intact and the recovery that started on Apr 9 appears corrective. The move higher has allowed an oversold trend condition to unwind. Recent weakness resulted in the breach of a number of important support levels, reinforcing a bearish threat. A clear resumption of the bear cycle would open $53.72, a Fibonacci projection. Resistance to watch is $65.59, the 50-day EMA.
