Money markets now fully price in a 10 bps rate hike by the ECB in Q3 2019
The probability of a rate hike in June 2019 has come back up to ~50% after falling close to 30% on Tuesday last week when the situation in Italy reached its peak - where we saw Italy-Germany 10-year yields spread surpass 300 bps.
If anything, this at least shows some relief in the market as well as the reception towards the relative calm we're seeing to start the week. And that so far has been a positive factor for the euro, as EUR/USD now trades at 1.1726 up almost 0.6% on the day.
