OUTLOOK: Price Signal Summary - USDJPY Rally Exposes The Bull Trigger
* In FX, the trend in EURUSD remains bullish, however, a short-term corrective cycle is in play fo...
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ECB: ECB Speak Wrap (Oct 31 – Nov 19) - A Few Tweaks To Hawk/Dove Matrix
The implied probability of another ECB cut this cycle has pulled back since the ECB’s October decision. OIS markets now price just 9bps of easing through September 2026 (vs ~12bps before the October decision). A combination of resilient growth signals and fairly cautious ECBspeak have factored into recent repricing, even with some Governing Council members still cognizant of downside inflation risks in the medium term.
The introduction of the EU’s ETS2 carbon pricing scheme is likely to be delayed by a year to 2028. This is expected to mechanically pull down the ECB’s 2027 inflation projection by ~0.3pp, deepening the expected undershoot of the 2% target, but policymakers have warned against relying too much on these dynamics for calibrating near-term policy.
Taking into account commentary since the October decision, we’ve made a few tweaks to our ECB hawk/dove matrix. See the full report for more
SONIA OPTIONS: Call Calendar Spread
SFIM6 96.70c vs SFIH6 96.55c, sold the June at 4.25 in 5k.
BONDS: German 5s/10s Flattener via Options
- RXZ5 129p, sold at 32 in 2k.
- OEZ5 118p, bought for 11 in 3.7k.
