Exclusive insight for TMI subscribers! Northern Trust Asset Management share a monthly market commentary for treasurers.
Eurozone Market Update
April’s European Central Bank (ECB) meeting minutes were viewed as dovish but outdated by the time of their mid-May release. Throughout May, committee members discussed the need to move towards normalisation in ECB policy, starting with a first rate hike in July. Influential committee members, such as German economist Isabel Schnabel and President Lagarde, also suggested negative rates would be left behind by the end of Q3, implying at least two 25 bps hikes. Overnight indexed swap rates barely changed despite this hawkish shift. We believe the ECB will hike rates back to zero in the coming meetings, for the first time since 2014.