Rates Spark: Not Much Is Needed For More Dovish ECB Pricing

2025-04-25 04:20:00 ET

Summary

• Risk assets appreciate the positive headlines on US trade, which seem to be occurring more frequently right now.
• Eurozone data thus far, such as the PMIs and Thursday’s Ifo, has held up relatively well given the bleak prospects on trade.
• Having said that, euro markets are still keen to price in more policy rate cuts and European Central Bank speakers are not offering any pushback; if anything, it's the opposite.

By Benjamin Schroeder

ECB speakers are feeding the already dovish sentiment

Notwithstanding the flip-flopping messages on tariffs, there is a sense that (at least parts of) the US administration is seeing that the situation is unsustainable. On the sidelines of the DC meetings, the outgoing German finance minister, for instance, was positive on reaching a trade deal within the 90-day period while describing the conversations with US Treasury Secretary Scott Bessent as productive. Risk assets at least appear to have found some footing, even if yields are turning somewhat lower again....

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