POLAND: MPC Likely To Pause In June, April Minutes Eyed Today

Attention will again be on the EU Cash Open, following the White House pressing on with Tariffs and escalated the War against China.

While the Risk is Off, the Estoxx futures (VGM5) hasn't quite managed to break this Week's low of 4444.00, Today's low is at 4476.00.

• Calls: Estox 50: -3.18%, Dax: -3.11%, CAC: -3.48%, FTSE -2.37%, SMI -3.24%.

The broader risk-off price action, detailed elsewhere, drives dovish BoE repricing at the open, before a pullback.

• 91bp of cuts are now priced through year-end, with ~30bp showing for next month’s meeting. Pricing covering '25 meetings is 3-9bp more dovish vs. yesterday's close.
• SONIA futures +12.5 to -13.0, curve twist steepens. October ’24 highs were respected or went unchallenged across the strip.
• While some former MPC members have called for a 50bp cut/inter-meeting action, we don’t believe such moves are justified at present (and note the calls have come from former doves).
• Still, the market prices a ~20% chance of more than 25bp of easing being delivered come the end of the May meeting.
• MPC member Lombardelli didn’t provide much in the way of market-pertinent commentary.
• A reminder that BoE’s Breeden will speak at an MNI Connect event on Thursday, covering “UK economic and financial stability prospects."

The imposition of US reciprocal tariffs overnight prompts a further dovish repricing in EUR short-end implied rates this morning, with ECB-dated OIS now fully pricing a 25bp at next Thursday’s decision (at yesterday's close, the OIS implied probability was ~90%).

• There are 83bps of easing priced through year-end, 5bps more dovish than yesterday’s close but off opening extremes of 85bps.
• The consensus view amongst ECB Governing Council members is that the immediate risk of higher tariffs will be to weigh on growth, supporting lower rates.
• Yesterday, EC hawk Nagel noted that the tariffs have “significantly worsened global growth prospects".
• A 50bp cut next week probably doesn’t have much support amongst the GC at this stage (Simkus pushed back on the idea in an interview yesterday), but sequential cuts in April and June are now back to being the base case for markets.
• The Euribor strip has twist steepened, with core FI weakness – particularly in USTs – weighing on the greens/blues. Futures are +5.0 to -7.5 ticks through the blues at typing.
• Tariff-related headlines will once again be today’s key focus, while ECB’s Escriva, Knot, Villeroy and Cipollone are scheduled to speak.