STIR: No Reaction To ECB Decision; 11bps of Cuts Priced Through Sep '26
Oct-30 13:26
No reaction in EUR STIRs to the ECB decision, with the short statement providing no surprises. Roundup of current cumulative cut pricing ahead of the 1345GMT press conference:
- Dec ’25: 1.5bps
- Feb ’26: 2.5bps
- Mar ’26: 6.5bps
- Jun ’26: 10bps
- Sep ’26: 11bps.
Our focus for the press conference at 1345GMT:
- Growth: Last month's meeting saw growth risks having "become more balanced". We'll watch for any further changes here after Friday's strong flash PMIs plus possible Lagarde comments later in the Q&A after this morning's stronger than expected Q3 GDP data.
- Inflation: Inflation risks have been too many to net out recently and we'll watch to see if this is still the case, or whether trade disruptions including chip shortages, for example, are painted in a hawkish light.
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EQUITIES: US Cash Opening Calls
Sep-30 13:25
US Cash Opening Calls, set for a flat Open.
- Fair values seen at: SPX: 6,664.5 (+0.0%); DJIA: 46,310 (-0.0%/-6pts); NDX: 24,641.3 (+0.1%).
ECB: Lagarde Repeats ECB "Well Placed" At 2%
Sep-30 13:19
Lagarde strikes a confident tone in her keynote speech in Helsinki today on "Trade wars and central banks: lessons from 2025". Link here, key highlights below:
- "With no retaliation and an appreciating exchange rate, tariffs have had little inflationary impact so far, with their adverse effects mainly limited to growth. Those effects, however, have been relatively moderate thanks to the domestic response."
- "I have said that we are in a good place [...] there are also three additional reasons why it applies to the current situation." She goes on to mention a lack of policy trade-offs because of little new inflationary pressures, inflation risks appearing contained, and the ECB being well placed at 2% to respond to new shocks as reasons.
- "For our part, we cannot pre-commit to any future rate path, whether one of action or inaction. We must remain agile, and ready to respond to the data as they come in."
- "We can take comfort in having overcome a large inflation shock after the pandemic, and in how the economy has coped so far with an upheaval in trade relations.
- "We must remain alert to the possibility that not all the consequences are visible today – and that new shocks may still lie ahead.
EUROPEAN INFLATION: German National Indeed Sees Higher Energy And Services
Sep-30 13:18
The main categories of the German national-level data show higher energy and services inflation, as expected following the state-level data out earlier today:
- Energy moved up as expected, to -0.7% (-0.7% MNI tracking, -2.4% prior) amid base effects.
- Services accelerated even more than we had thought, to 3.4% (3.3% MNI tracking), the first uptick after two consecutive prints at 3.1%. The Bundesbank sees the category continuing to rise towards the end of the year on the back of travel price base effects.
- This led core CPI to speed up to 2.8% Y/Y (2.8% MNI tracking, 2.7% prior). The category stood at 2.7% for three consecutive months previously.
- Food came in lower than before, meanwhile, at 2.1% Y/Y (MNI tracking was incl. alcoholic beverages and was also for a deceleration, 2.5% prior). This is the lowest rate since June. As mentioned previously, the category arguably stands under elevated scrutiny following a recent ECB post on its importance for inflation expectations.
