October’s ECB cheat sheet: Reluctant mark-to-market

From think.ing.com

A slate of weaker survey data and a cooler September CPI prompted officials at the European Central Bank to open the door to a cut in October. Markets took the hint and have since firmly priced in an October cut as the base case. In fact, markets firmly see at least four back-to-back 25bp cuts as the baseline scenario at the moment. With such strong conviction about this cut and future cuts, the risk of disappointment is high, and thus we maintain a bias towards higher front-end rates. Our economists believe that the ECB will find enough reason to cut this week and not disrupt markets. But the case for a cut and then ... (full story)