- We had highlighted three risks to our base case, and the Fed managed to deliver on all three.
- The 5bp hike in the rate on excess reserves (from 10bp to 15bp) is being downplayed by the Fed as being just that - a technical move.
- The market reaction has been clear, but actually muted - ahead is key.
- The ECB allots the 8th TLTRO-III. The immediate impact is likely marginal, but the future of the programme creates some uncertainty that we think is reflected in the wider forward money market spreads.
For further details see:
Rates Spark: The Fed Does See What We See