STIR: Solid PMIs help fuel EUR front end underperformance
* Driven by the underperformance following today's solid flash PMIs, the Z6/Z7/Z8 Euribor fly has backed up and is flirting with 60bps as the belly underperforms. * The summer improvement in the PMIs gave the ECB confidence to hike earlier this month, and today's numbers suggest there is little to push back on the hawkish rhetoric surrounding that decision. The data helps support the view that the economy can withstand higher energy prices, validating the hawkish adjustment at the front end, where ~80bps of hikes are now priced by mid-next year, which will keep the fly elevated. Source: Blooomberg Finance LP, MNI
* Driven by the underperformance following today's solid flash PMIs, the Z6/Z7/Z8 Euribor fly has backed up and is flirting with 60bps as the belly underperforms. * The summer improvement in the PMIs gave the ECB confidence to hike earlier this month, and today's numbers suggest there is little to push back on the hawkish rhetoric surrounding that decision. The data helps support the view that the economy can withstand higher energy prices, validating the hawkish adjustment at the front end, where ~80bps of hikes are now priced by mid-next year, which will keep the fly elevated. Source: Blooomberg Finance LP, MNI