Unlike the Fed or the Bank of England, the ECB looks to have more time before excess reserves reach levels where bigger shifts in banks' behaviour will become obvious. Recourse to the ECB facilities remains relatively low and upward pressure on short-term rates is still very gradual
The dollar remains bid as the market continues to question whether the Fed needs to cut rates to 3.00/3.25% after all. Also helping the dollar may be tight money market conditions as the US Treasury restocks its cash balances. In the absence of official data, the focus this week will be on insights into the US job market from private sector releases
The US remains in a steady state along the coupon curve. But there’s a lot going on in the money markets pipes as repo tightness persists. As we head into the Federal Reserve meeting, the big call would be to maintain the MBS roll-off and replace it with buying of T-bills, while broadly ending quantitative tightening
