STIR: 3.5 ECB Cuts Priced Through Year-End, Flash Inflation Data Eyed
Feb-28 07:40
Dovish moves in ECB-dated OIS as trade war worry continued to support core global FI markets overnight.
- ECB-dated OIS more or less fully discounts a 25bp cut at next month’s meeting, with 62.5bp of cuts priced over the next 3 decisions i.e. 2.5x 25 cuts are priced over that horizon.
- 87.5bp of cuts priced through year-end vs. closer to 85bp late yesterday.
- Euribor futures 1.5-3.5 higher.
- French & German CPI data headline the European calendar today, with the Italian equivalent also due.
- February’s initial Eurozone inflation data is due to be released on Monday.
- A reminder that yesterday’s Spanish CPI data was in line to softer-than-expected.
- ECB consumer inflation expectations data is also due.
- The ECB has expressed confidence in headline inflation returning sustainably to the 2% target during the course of this year, underscored by an expected deceleration in services inflation on the back of easing wage growth.
- Services inflation has been stuck around 4% Y/Y since November 2023.
- In a generally hawkish interview with the FT last week, Executive Board member Schnabel said she expects to start seeing services inflation moderate from February.
- This will provide the primary focus for markets heading into the releases.
ECB Meeting | €STR ECB-Dated OIS (%) | Difference Vs. Current Effective €STR Rate (bp) |
Mar-25 | 2.418 | -24.8 |
Apr-25 | 2.236 | -43.0 |
Jun-25 | 2.041 | -62.5 |
Jul-25 | 1.967 | -70.0 |
Sep-25 | 1.873 | -79.3 |
Oct-25 | 1.844 | -82.2 |
Dec-25 | 1.790 | -87.6 |
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Historical bullets
EQUITY TECHS: E-MINI S&P: (H5) Trend Structure Remains Bullish
Jan-29 07:38
- RES 4: 6200.00 Round number resistance
- RES 3: 6178.75 High Dec 6 and key resistance
- RES 2: 6163.75 High Dec 16
- RES 1: 6162.28 High Jan 24
- PRICE: 6103.25 @ 07:27 GMT Jan 29
- SUP 1: 6013.75 50-day EMA
- SUP 2: 5961.75/5948.00 Low Jan 16 / 27
- SUP 3: 5943.94 61.8% retracement of the Jan 13 - 24 bull leg
- SUP 4: 5892.37 76.4% retracement of the Aug 5 - Dec 6 bull leg
The S&P E-Minis contract remains above Monday’s low. Key short-term support to watch lies at 5961.75, the Jan 16 low (pierced). For now, the recent sharp pullback appears corrective, however, a clear breach of 5961.75 would strengthen a bearish threat and signal scope for a deeper retracement, towards 5943.94, a Fibonacci retracement. Key resistance is 6178.75, the Dec 6 high.
GILT SYNDICATION: DMO announces 10-year syndication to be held W/C 10 February
Jan-29 07:37
- The DMO has announced that the upcoming 10-year syndication (new issue maturing 7 March 2035 with ISIN GB00BT7J0027 and long first coupong) will launch in the W/C 7 March.
- This is in line with our expectations - we had pencilled in 11 February for the launch date since the FQ4 calendar was announced (the DMO had previously announced it would be a 10-year gilt to be held in February and the W/C 10 February was the obvious choice).
- There is GBP8.5bln in the DMO's medium-dated gilt syndication bucket, but we see potential to upside the deal to as much as GBP10.0bln (so pencil in a GBP8.5-10.0bln range).
USD: Focus is on the Equity Cash Open
Jan-29 07:30
- A steady session for the Dollar overnight, similar to what has been witnessed in Govies, looking at multi Assets.
- The Early story is squarely on the Equity spike overnight, this has been led by the Tech sector and the Dutch ASML recording a beat in early.
- Looking at the Dollar against G10s, it is mixed, the Pound is up 0.24% and at the other end of the spectrum, the Aussie is down 0.16%.
- Equities are always a potential driver for the Dollar, and besides the Tech sector, Luxury Goods will also be watched on the open, since LVHM's earnings disappointed last night.
- In Terms of Dollar Technical, most pair/crosses still trade within ranges, the most traded EURUSD pair trades in a very tight 18 pips range, although it is testing session low now.
