The Insurance Hike Arrives

A June ECB hike now looks done, but this isn't the start of a hiking cycle.

A month ago, we noted in ‘The ECB’s Insurance Hike’ that “an insurance hike, likely in June or July, helps the ECB to retain credibility with the market without committing to a sustained hiking cycle.”

Today, we got a coordinated media hit from ECB members Schnabel and Lane that shifted a June hike from being probable to (what we believe) a done deal.

However, before everyone rushes to be a seller of ERZ6, the notion that a June hike leads to three or more hikes this year is still not something we believe should start to be considered in the conversation.