HUNGARY: Local Markets Shut Over Labor Day

Spillover from cross-asset moves and ECB pricing has shaped GBP STIR trade since yesterday’s settlement.

• BoE-dated OIS little changed to ~1.5bp more dovish vs. closing levels.
• 18bp of cuts showing for next month (we still look for a cut at that meeting), with 22bp of cuts showing through June, 35bp through August and 52bp priced through year-end.
• SONIA futures last flat to +2.5.
• Multi-week ranges intact across GBP STIRs, even after the dovish moves seen in recent sessions.
• Final manufacturing PMI data and comments from BoE MPC member Greene (on UK policymaking/macro conjuncture at 09:15 BST) headline the UK calendar today.

SFIM5 95.60/95.70/95.95/96.05c condor, sold at 6.5 in 3k.

The hawkish reaction to yesterday’s BBG ECB sources piece has faded a little , with Bunds off their late NY pullback lows.

• ECB-dated OIS flat to ~3bp more dovish vs. closing levels.
• 18bp of cuts priced for this month, 35bp through June and 60bp through year-end.
• Euribor futures flat to +5.0.
• As a reminder, BBG’s sources noted that “several ECB officials are still wavering on whether to cut interest rates in April”…”policymakers from across the hawk-dove spectrum are contemplating a pause given heightened uncertainty over US President Trump’s trade policies and Europe’s military-spending surge”.
• The BBG echoes our own ECB sources piece, which noted that “a broad majority of ECB Governing Council officials see another 50bp in easing, taking the deposit rate to 2% under a base-case scenario, but there is no consensus over the timing of these likely two cuts”.
• The BBG story was worth ~5bp of hawkish repricing in the April ECB-dated OIS contract, with a ~7bp hawkish adjustment seen in December meeting OIS.
• Those initial moves have been roughly halved during the late Monday/early Tuesday pullback.
• The Eurozone inflation data headlines the regional calendar today, with already published national level data tracking at ~+2.1% Y/Y for HICP. The BBG survey consensus sits at +2.2%.
• Elsewhere, final manufacturing PMIs are scheduled.
• ECBspeak will come from Lagarde, Lane, Cipollone and Vujcic. Note that Lagarde and Lane will give introductory/welcoming comments at the ECB’s AI conference, so may not cover much when it comes to monetary policy.