Rates pricing swings back the other way
Eonia futures for the September 2022 meeting is now fully pricing in a 10 bps move by the ECB, after having earlier this week positioned for a move in December 2022 instead; the latter is now seeing a 20 bps rate hike priced in.
This comes after we saw the bets cool off over the past week or so as bond yields slipped but everything is starting to turn again now after the hot US CPI data yesterday.
ING's senior rates strategist, Antoine Bouvet, says that:
"Today's US market closure offers a faint hope of less volatile market conditions but we wouldn't hold our breath."
Adding that while the ECB's dovish message may have landed on euro area bonds, "they are not immune to global developments".
As much as the market is trying to bully central banks again as they did in October, I would expect policymakers to reaffirm their fighting words in the past two weeks.
