Euro rates started the week in an incredibly bearish mood, catching markets (and ourselves) quite by surprise. Suddenly the possibility of more European Central Bank easing seems gone with money market curves now almost perfectly flat one year out. To be fair, many of the risks we identified earlier as triggers for more cuts seem to have faded. For one, growth continues to pick up, with Monday’s data even providing hope for Germany given decent industrial production numbers. Secondly, service price pressures remain more stubborn than hoped, keeping core inflation well above target for now. Add hawkish comments from ... (full story)