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STIR: Balance of Risks Still Tilts Heavily In Favour Of June ECB Cut
The implied probability of a June ECB rate cut has pulled back to ~80%, after hovering between 90% and 100% over the last few weeks following the April decision. The temporary rollback in tariffs between the US and China has supported risk sentiment and reduced global easing expectations. However, the lack of progress on an EU/US trade deal still keeps Eurozone growth risks tilted to the downside, and the balance of ECB speakers since the April decision still leans heavily in favour of a June cut.
- The implied probability of a 25bp cut in July (not a projection meeting) is just ~25%, while the there is a ~40% implied probability of a 25bp cut at the September projection meeting. That leaves less than 50bps of easing priced through year-end.
- Euribor futures are -0.5 to -2.5 ticks through the blues, a touch off session lows following this morning’s softer-than-expected UK wage data.
- The German May ZEW survey is due at 1000GMT, while ECBspeak is due from Makhlouf and Knot. Escriva called for “agile policy responses” this morning.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Jun-25 | 1.963 | -20.7 |
| Jul-25 | 1.899 | -27.1 |
| Sep-25 | 1.796 | -37.4 |
| Oct-25 | 1.762 | -40.8 |
| Dec-25 | 1.717 | -45.4 |
| Feb-26 | 1.709 | -46.1 |
| Mar-26 | 1.707 | -46.4 |
| Apr-26 | 1.724 | -44.6 |
| Source: MNI/Bloomberg. | ||
SILVER TECHS: Trend Needle Points North
- RES 4: $36.000 - Round number resistance
- RES 3: $34.903 - High Oct 23 ‘24 and the bull trigger
- RES 2: $34.590 - High Mar 28
- RES 1: $33.686 - High Apr 25
- PRICE: $33.147 @ 08:10 BST May 13
- SUP 1: $31.668 - Low May 1
- SUP 2: $30.915/28.351 - Low Apr 11 / 7 and the bear trigger
- SUP 3: $27.686 - Low Sep 6 ‘24
- SUP 4: $27.180 - Low Aug 14 ‘24
A bullish theme in Silver remains intact and the latest pullback that started Apr 25, is likely a correction. Key short-term support has been defined at $31.668, the May 1 low. A break of this level would signal scope for a deeper retracement and open $30.915, the Apr 11 low. For bulls, resistance to watch is $33.686, the Apr 25 high. Clearance of this level would confirm a resumption of the uptrend.
UK DMO UPDATE: Record Of The DMO Consultations With Gilt Market Participants
The DMO takes account of yesterday's consultations with gilt investors and market makers:
- "The DMO is planning to schedule one syndicated offering during the period for the sale of a new medium conventional gilt with the transaction planned to take place in September 2025. The DMO set out preliminary proposals for a schedule of programmatic gilt tenders in Q2 2025-26."
- The syndication scheduling comes after GEMMs and gilt investors raised strong support for such a medium conventional syndication in Q2 2025-26 for a gilt maturing in either 2035 or 2036.
- Gilt auctions and programmatic gilt tenders were also discussed in detail.
