Attached Image (click to enlarge)
-
EUR rates: Pricing rate cuts
Markets price substantial rate cuts on the other side of the end of the Fed and ECB hiking cycles. Rate cuts require significantly lower inflation which markets are pricing. However, terminal rates may still rise and push rate cuts out on the curve. In a previous note I wrote that pivot risks could mean smaller hikes, but a shifting focus from inflation to growth seemed premature. While I could claim – boldly, perhaps – that both Fed Chair Powell and ECB President Lagarde agrees, the markets clearly do not! And neither does a growing number of FOMC and Governing Council members, according to various speeches and ... (full story)