STIR: Light Dovish Repricing In ECB-dated OIS Centred In April/June Spread
Feb-24 16:01
Today’s light dovish repricing in ECB-dated OIS has been centred in the April-June spread, which now prices 19bps of cuts from 17bps at Friday’s close. Implied cuts through the March and April gatherings are unchanged at 24bps and 41bps respectively. There are 81bps of easing priced through year-end (vs 79bps on Friday).
- Today’s regional data (final January HICP, German IFO survey) was not market moving, with primary focus on tomorrow’s Q4 negotiated wages data and the February flash inflation round on Thursday/Friday.
- Wage metrics over the past few weeks (ECB’s forward looking wage tracker and the Indeed wage tracker) have generally supported the ECB’s base case for a moderation of labour costs.
- Executive Board member Schnabel also delivers a speech titled “No Longer Convenient? Safe Asset Abundance and r*” at 1300GMT tomorrow, at the 2025 BOE BEAR conference on “The Future of the Central Bank Balance Sheet”.
- This comes following last week’s MNI event with Executive Board member Cipollone, who highlighted that the liquidity demand of Eurozone banks will be the key determinant of the ECB’s future balance sheet size.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Mar-25 | 2.422 | -24.4 |
| Apr-25 | 2.258 | -40.8 |
| Jun-25 | 2.070 | -59.6 |
| Jul-25 | 2.006 | -66.0 |
| Sep-25 | 1.921 | -74.5 |
| Oct-25 | 1.900 | -76.6 |
| Dec-25 | 1.855 | -81.1 |
| Feb-26 | 1.850 | -81.6 |
| Source: MNI/Bloomberg. | ||
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AUSSIE 10-YEAR TECHS: (H5) Resistance Remains Intact
Jan-24 23:15
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.615/851 - High Dec 31 / High Dec 11
- PRICE: 95.510 @ 15:51 GMT Jan 24
- SUP 1: 95.275 - Low Nov 14 (cont) and a key support
- SUP 2: 94.477 - 1.000 proj of the Dec 11 - 23 - 31 price swing
- SUP 3: 94.495 - 1.0% 10-dma envelope
The Aussie 10-yr futures contract continues to trade below the Dec 11 high of 95.851, and has traded through the Dec low. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish theme. For bulls, a confirmed reversal and a breach of 95.851, the Dec 11 high, would instead reinstate a bull cycle and refocus attention on resistance at 96.207, a Fibonacci retracement point.
FED: MNI Fed Preview-Jan 2025: Keeping Rate Cut Hope Alive
Jan-24 21:35
We've just published our preview of the January FOMC meeting:
- The FOMC will keep the benchmark Fed funds rate on hold on January 29 for the first time in four meetings, as it shifts to a more patient phase of its easing cycle after delivering 100bp of cuts.
- The forward guidance adopted in December points to a data-dependent approach to assessing the “extent and timing” of additional rate adjustments. To this end, there has been only limited inflation and labor market data since then, while the Trump administration’s policies and their potential impact on the economic outlook are still in a formative stage.
- With minimal Statement changes expected and no new rate/macro projections, the focus will be on Chair Powell’s press conference which will likely repeat the same themes heard six weeks earlier.
- As such, the risks to the market reaction to the meeting lean slightly dovish in the context of only one more full rate cut being priced for the cycle.
- While he won’t be able to add any additional commentary on the Fed’s response to prospective fiscal/trade/immigration policy shifts, we suspect Powell will remain optimistic on the inflation trajectory and reiterate that 50bp of cuts remain the FOMC’s baseline scenario this year. In other words, the bias toward easing remains intact.
- Additionally, Powell probably won’t completely rule out another cut as soon as the next meeting in March, while being careful to couch any future moves as data- and outlook- dependent, and emphasizing that the Fed can afford to be patient so long as the economy and labor market remain solid.
Note to readers: MNI’s separate preview of sell-side analyst summaries to follow on Monday Jan 27
MACRO ANALYSIS: MNI US Macro Weekly: Fed Remains Firmly On Track To Hold
Jan-24 21:34
- Data in the week ahead of the January Fed meeting was thin and overall mixed, with President Trump’s apparently softer tone on tariffs helping implied rates soften slightly toward end-week.
- January’s preliminary Services PMI reading unexpectedly fell to its lowest since April 2024, though had some slightly less dovish details.
- Weekly continuing claims provided a surprise on the weak side, just exceeding recent highs, but the broad report (including initial claims a touch higher than expected) didn’t materially change the story of firms dampening down on re-hiring rather than turning to layoffs to manage headcount.
- Looking ahead to next week, the FOMC will keep the benchmark Fed funds rate on hold on January 29 for the first time in four meetings. With minimal Statement changes expected and no new rate/macro projections, the focus will be on Chair Powell’s press conference.
- He won't totally rule out a cut at the next meeting in March, but he’ll probably reiterate that the Fed can remain patient on its next move until receiving more clarity on both inflation data and the government policy outlook (i.e. not until later in the year). Markets continue to price between 1 and 2 cuts by end-2025.
- Aside from Tuesday’s preliminary durable goods report, data for the coming week is backloaded with the highlights being the first estimate of real GDP growth in Q4 on Thursday before the monthly PCE report for December on Friday.
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