Thursday sees the ECB Governing Council decide on monetary policy. Since the hawkish members of the Council have been more vocal since the summer, and given largely resilient data and even a small uptick in August inflation, the market is not priced for any policy change at this stage. It is only further out into the next year that market pricing still reflects the probability of one more rate cut – for June 2026 some 16bp of easing are priced in. This rather muted view on further easing potential is also reflected in German 2y Schatz yields, currently at 1.95%. We think the market looks too complacent about the ... (full story)