GLOBAL: Labor Day Holidays Should Keep Friday Particularly Quiet

ECB’s Muller maintains his position at the hawkish end of the ECB Governing Council in latest comments to Bloomberg. 

• “It’s very hard to say what state we might be in by the end of April. We certainly can’t rule out changes in interest rates already in April if energy prices remain at a high level for a long time.”
• He said he’d closely monitor wages and the labor market as key indicators of broader inflation pressures, while drawing a distinction between goods and services where energy is an important input, such as airlines.
• His comments follow this from earlier today:
  • "*ECB'S MULLER: PROBABLE RATES WILL RISE IN COMING QUARTERS
  • *MULLER: ECB'S BASELINE IS PROBABLY NOW OPTIMISTIC" - bbg

Recall that he last week made a surprising headline on not needing to fully see second-round effects (an area that ECB leadership want to monitor before acting) before hiking:

• "*ECB MAY NOT NEED FULLY VISIBLE 2ND-ROUND EFFECTS TO ACT: MULLER" – bbg
• Specifically, he said: “I am not sure we need to wait until all of that is fully visible […] Once energy prices have remained elevated for several weeks, one can already be reasonably confident that second-round effects are likely.”

• ESTR vs ERM6 has traded in ~12.6k Today, 6k of those went through on the Fix.
• The spread was sold as the Fix came lower and ESTR/ERM6 tested the March low of 12.75, now 13 bid.

(Chart Source: MNI/Bloomberg Finance LP).

• Net increase GBP1.409bln to GBP74.183bln (last week's high was the previous record net usage).
• Gross takeup GBP6.494bln (highest since 28 October 2025) - but this was to be expecting as the amount rolling off now is corresponding to the more fast paced takeup as the TFSME payments stated to be repaid.