ECB: Little Reaction To Q1 GDP / Compensation Data

Fairly contained reaction in near-term EUR rates to the Q1 GDP / compensation per employee release. ECB-dated OIS price 26bps of easing through year-end (vs 23bps at yesterday's close).

• As noted above, President Lagarde had already somewhat prepared markets for an upward revision to Q1 GDP, particularly after country-level data released over the past week (e.g. In Germany).
• Q1 compensation per employee was 3.8% Y/Y (vs 4.1% prior). The ECB projected this to come in at 3.5% Y/Y in yesterday's June projection round.
• However, any hawkish impetus from the compensation figure is likely already in the price after yesterday's press conference.
• A reminder that the ECB will release its forward looking wage tracker - a very important series in the eyes of the Governing Council - next Wednesday.
• The GC had access to this tracker ahead of yesterday's decision. In the press conference, Lagarde said "The ECB’s wage tracker points to a further easing of negotiated wage growth in 2025, while the staff projections see wage growth falling to below 3 per cent in 2026 and 2027. "