ECB: Knot Concludes MNI Webcast, Flags Pace of Hikes Could Persist Beyond March
Feb-08 2023 16:16
Knot Webcast with MNI now concluded, highlights include:
- Sees current pace of hikes warranted into May should underlying inflationary pressures not materially abate
- Retained view that bigger risks remain surrounding not doing enough on rates
- Noted that sticky price rises, particularly in services, could see core inflation continue to rise even as falling energy prices contribute to a decline in headline inflation
- A crossover in average euro area measures of HICP inflation and inflation excluding energy and food is "well possible… the likelihood is clearly there"
- On quantitative tightening, commented that he is optimistic about the market's capacity to absorb QT
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STIR: Futures Pricing Increasingly Aggressive ECB Cuts
Jan-09 2023 16:10
ECB rates are seen peaking after roughly 146bp of further hikes by the July or September 2023 meetings (implying depo rates just under 3.50%).
- But there is an increasingly aggressive cutting cycle being priced beyond that: 76bp in cuts from the peak to end-2024, as implied by Sep'23 / Dec'24 Euribor futures.
- Coming into 2023, only 60bp of cuts were seen over that period. See chart.
Source: BBG, MNI
US TSY FUTURES: BLOCK, 10Y Sale
Jan-09 2023 16:01
- -5,354 TYH3 114-11, post-time bid at 1051:21ET, 114-12.5 last (+5.5)
EGB OPTIONS: Bund Put Ladder Buyer
Jan-09 2023 15:58
Earlier in the session:
- RXG3 134/131/129 put ladder bought for 28 in 2k
