HomeContributorsFundamental AnalysisEuribor Fixing Below ECB Deposit Rate For The 1st Time

Euribor Fixing Below ECB Deposit Rate For The 1st Time


  • Euro Zone Aug CPI registered its 1st negative reading in 4 years with the core rate at a record low; ECB official continue to talk that FX is a variable in inflation outlook
  • Daily 3-Month Euribor Fixing at -0.501% for a record low and below ECB’s deposit rate for 1st time
  • No surprises on the rate front in session (Indonesia, Taiwan keep policy steady)


  • BOJ left its policy unchanged as expected; Left Interest Rate on Excess Reserves (IOER) unchanged at -0.10% and maintained 10-Year Yield Target at 0.00%. Reiterated stance that would not hesitate to take additional easing if needed. Raised its overall economic assessment that the domestic economy likely to follow an improving trend but improvement would be only moderate. Uncertainties were extremely high over the impact of the virus. CPI to negative for the time being due to pandemic and energy prices
  • New Zealand Q2 GDP registered a record contraction and its 1st technical recession since 2010 (Q/Q: -12.2% v -12.5%e; Y/Y: -12.4% -12.8%e
  • 21:30 (AU) Australia Aug Employment Change: +111.0K v -35.0Ke; Unemployment Rate: 6.8% v 7.7%e


  • PM Johnson reached an agreement with Tory rebel MPs over Brexit law and would propose amendment to internal market bill. Govt agreed to compromise that gave the House of Commons an explicit vote on authorizing any breach of international law


  • FOMC left the Target Range unchanged between 0.00-0.25% (as expected). To maintain low rates until job and inflation targets were met. 13 of 17 members saw no rate hike at least through 2023. Decision was 8-2 with members Kaplan and Kashkari dissenting
  • Fed Chair Powell post rate decision press conference noted that its policy statement contained ‘powerful forward guidance’; expected guidance offered today as
  • Net Long-term TIC Flows: $10.8B v $113.0B prior; Total Net TIC Flows: -$88.7B v -$67.8B prior
  • House Speaker Pelosi spoke with Tsy Sec Mnuchin about relief measures, looking at a stop gap bill
  • US presidential candidate Biden stated that any trade deal between the US and UK must be contingent upon respect for the Good Friday Agreement and preventing the return of a hard border, period
  • Brazil Central Bank (BCB) left the Selic Rate Target unchanged at 2.00% (as expected) for its its 1st in 13 meetings in the current easing cycle



  • Indices [Stoxx600 -0.70% at 370.54, FTSE -0.68% at 6,037.04, DAX -0.73% at 13,158.35, CAC-40 -0.69% at 5,039.20, IBEX-35 -0.70% at 7,061.00, FTSE MIB -1.00% at 19,764.50, SMI -0.57% 10,492.69, S&P 500 Futures -1.12%]
  • Market Focal Points/Key Themes: European indices open generally lower and moved into the red as the session progressed; sectors leading to the upside include consumer discretionary and energy; technology and materials sectors among underperformers; press speculation that UK might tighten coronavirus restrictions; Unibail announces share issue; reportedly EU regulators opposed to Telecom Italia merger; focus on upcoming BOE rate decision; French FinMin insisted no plans to raise taxes; Eu car registrations register 7th month of decline; no major equities events expected in the upcoming US session


  • Consumer discretionary: Next [NXT.UK] +2% (earnings), Greenyard [GREEN.BE] +5% (raises outlook), Delivery Hero [DHER.DE] +1.5% (acquisition), Playtech [PTEC.UK] -6% (earnings)
  • Financials: IG Group [IGG.UK] +7% (Q1 update)
  • Industrials: Daimler [DAI.DE] -1% (Europe car sales)
  • Telecom: Telecom Italia [TIT.IT] -3% (EU said to oppose merger of Italy’s broadband networks)


  • ECB’s De Giuindos (Spain) stated that the inflation outlook to determine policy – not the Euro. He reiterated Council view that economic recovery to be uneven and unequal. He also reiterated that Pandemic Bond buying fund (PEPP) is flexible and can be extended if necessary. Reiterated view that ECB to react based upon inflation projection and that exchange rate was a fundamental economic variable
  • ECB’s Rehn (Finland): Risk that inflation would continue to be too low but have averted the risk of deflation. FX is an important element on the inflation outlook
  • ECB: To allow temporary relief in banking sector leverage ratios. Exceptional circumstances justify leverage ratio relief
  • Germany Fin Min Scholz: 2021 budget to contain new debt of €100B
  • France Fin Min Le Maire retaliated view of no plans to raise taxes. Domestic economy was moving in the right direction
  • Fitch affirmed Taiwan sovereign rating at AA-; Outlook Stable
  • BOJ Gov Kuroda post rate decision press conference reiterated its stance that would not hesitate to add to easing if necessary and was closely watching the pandemic effects. Reiterated to continue efforts to achieve the 2% inflation target. It noted that price expectation i=was weakening but optimistic that inflation would go back to positive territory. Reiterated its new Overall assessment that the domestic economy had started to pick up but would only do so moderately. Exports and production were picking up but business investment was on declining trend. To keep supporting the funding of companies. BOJ to maintain close contact with govt on policy; had cooperated strongly with Govt (**Reminder: On Sept 16th Suga became PM and pledged to continue with Abenomics). To keep closely watching FX markets; desirable for orderly price movements
  • Japan Chief Cabinet Sec Kato stated that expected the BOJ to take the appropriate steps as necessary
  • Indonesia Central bank (BI) Policy Statement noted that the decision to keep policy steady was to help maintain IDR currency (Rupiah) stability and support economic growth. To continue interventions for FX stability and extend easing of RRR until Jun 2021 for banking lending to small businesses
  • Taiwan Central Bank (CBC) Policy Srtatement reiterated that it would continue with an expansionary policy. Saw a mild inflation outlook with no signs of deflation and saw frequent flows increasing FX volatility

Currencies/ Fixed Income

  • USD was holding onto its recent gains over the past 15 hours as the Fed’s policy meeting was deemed to be less dovish than expected
  • EUR/USD tested the 1.1740 before retracing the bulk of its loses. Session saw more ECB member note that the exchange rate was a variable in the inflation outlook. The Euro Zone Aug CPI was confirmed to register its 1st negative reading in 4 years with the core rate at a record low. The 1.15 area seen as key support now that 1.20 held in recent weeks.
  • Focus on BOE rate decision later today with GBP/USD steady at 1.2970 area. MPC seen likely to vote unanimously to keep monetary policy unchanged as markets viewed BOE had enough scope for current bond purchases to last until December. BOE’s stance likely to remain heavily skewed to the dovish side
  • USD/JPY continued to stay below the 105 handle. Some risk aversion flows aiding the yen.

Economic Data

  • (NL) Netherlands Aug Unemployment Rate: 4.6% v 4.5% prior
  • (EU) EU27 Aug New Car Registrations: % v % prior
  • (CH) Swiss Aug Trade Balance (CHF): 3.6B v 3.3B prior; Real Exports M/M: 2.9% v 2.0% prior; Real Imports M/M: -1.3% v +0.5% prior; Watch Exports Y/Y: -11.9% v -16.8% prior
  • (ES) Spain Q2 Labour Costs Y/Y: -8.3% v +0.8% prior
  • (AT) Austria Aug CPI M/M: -0.2% v 0.2% prior; Y/Y: 1.4% v 1.7% prior
  • (ID) Indonesia Central Bank (BI) left the 7-Day Reverse Repo Rate unchanged at 4.00% (as expected)
  • (PL) Poland Aug Employment M/M: -0.8% v +0.7%e; Y/Y: -1.5% v -1.5%e
  • (PL) Poland Aug Average Gross Wages M/M: -0.8% v -0.9%e; Y/Y: 4.1% v 4.0%e
  • (IT) Italy July Total Trade Balance: €B v €6.2B prior; Trade Balance EU: €B v €1.6B prior
  • (HK) Hong Kong Aug Unemployment Rate: 6.1% v 6.3%e
  • (TW) Taiwan Central Bank (CBC) left its Benchmark Interest Rate unchanged at 1.125% (as expected)
  • (EU) Euro Zone Aug Final CPI Y/Y: -0.2% v -0.2%e; CPI Core Y/Y: 0.4% v 0.4%e; CPI M/M: -0.4% v -0.4%e
  • (EU) Euro Zone July Construction Output M/M: 0.2% v 5.1% prior; Y/Y: -3.8% v -4.8% prior
  • (GR) Greece Q2 Unemployment Rate: 16.7% v 16.2% prior
  • (CY) Cyprus Aug CPI Harmonized M/M: +0.8% v -0.2% prior; Y/Y: -2.9% v -2.0% prior

Fixed Income Issuance

  • (ES) Spain Debt Agency (Tesoro) sold total €4.233B vs. €4.0-5.0B indicated range in 2023, 2027, 2041 and 2050 Bonds
  • Sold €675M in 0.00% Apr 2023 SPGB; Avg Yield: -0.449% v -0.392% prior; Bid-to-cover: 5.78x v 4.05x prior
  • Sold €935M in 0.8% July 2027 SPGB; Avg yield: -0.040% v -0.021% prior; Bid-to-cover: 3.43x v 1.22x prior
  • Sold €1.09B in 4.70% July 2041 SPGB; Avg Yield: 0.813% v 2.216% prior; Bid-to-cover: 1.43x v 1.27x prior
  • Sold €1.53B in 1.00% Oct 2050 SPGB Avg Yield: 1.091% v 1.205% prior; bid-to-cover: 1.25x v 1.42x prior
  • (FR) France Debt Agency (AFT) sold total €8.494B vs. €7.25-8.5B indicated range in 2023, 2026 and 2028 Bonds
  • Sold €2.696B in 0.00% Feb 2023 Oat; Avg Yield: -0.64% v -0.56% prior; Bid-to-cover: 2.98x v 3.02x prior (Jun 18th 2020)
  • Sold €3.80B in 0.50% May 2026 Oat; Avg Yield: -0.53% v -0.37% prior; Bid-to-cover: 1.92x v 2.40x prior (Oct 17th 2019)
  • Sold €1.998B in 0.75% May 2028 Oat; Avg Yield: -0.40% v -0.25% prior; Bid-to-cover: 2.76x v 1.97x prior
  • (SE) Sweden sold total SEK1.0B vs. SEK1.0B indicated in I/L 2026 and 2032 Bonds
  • (IE) Ireland Debt Agency (NTMA) sold €750M vs. €750M indicated in 6-month Bills; Avg Yield: -0.550% v -0.540% prior; Bid-to-cover: 2.50x v 3.00x prior

Looking Ahead

  • 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds
  • 05:30 (IE) Ireland Debt Agency (NTMA) to sell €750M in 6-month Bills
  • 05:50 (FR) France Debt Agency (AFT) to sell €0.75-1.25B in inflation-linked 2026, 2030 and 2047 bonds (Oatei)
  • 06:00 (PT) Portugal Aug PPI MM: No est v 0.2% prior; Y/Y: No est v -5.5% prior
  • 06:00 (RO) Romania to sell RON400M in 3.65% 2025 Bonds; Avg Yield: % v 3.73% prior; Bid-to-cover: x v 1.40x prior
  • 06:00 (CZ) Czech Republic to sell CZK10B in 3-month Bills
  • 07:00 (UK) Bank of England (BOR) Interest Rate Decision: Expected to leave Interest Rate unchanged at 0.10%; Expected to maintain Total Asset Purchase Program (APT) at £745B
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision
  • 08:00 (UK) BOE Gov Bailey at bond conference
  • 08:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to cut Interest Rates by 25bps to 3.25%
  • 08:30 (US) Aug Housing Starts: 1.483Me v 1.496M prior; Building Permits: 1.517Me v 1.483M prior (revised from 1.495M)
  • 08:30 (US) Sept Philadelphia Fed Business Outlook: 15.0e v 17.2 prior
  • 08:30 (US) Initial Jobless Claims: 850Ke v 884K prior; Continuing Claims: 13.00Me v 13.385M prior
  • 08:30 (CA) Canada Aug ADP Payroll Estimates: No est v +1.149M prior
  • 08:30 (US) Weekly USDA Net Export Sales
  • 09:00 (RU) Russia Gold and Forex Reserve w/e Sept 11th: No est v $591.7B prior
  • 09:00 (EU) ECB’s Muller (Estonia)
  • (UK) BOE postpones APT operation
  • 10:30 (US) Weekly EIA Natural Gas Inventories
  • 11:00 (CO) Colombia July Trade Balance: -$1.0Be v -$0.4B prior; Total Imports: $3.7Be v $2.9B prior
  • 12:00 (CA) Canada to sell 30 Year Bonds
  • 13:00 (US) Treasury to sell 10-year TIPS
  • 19:30 (JP) Japan Aug National CPI Y/Y: 0.2%e v 0.3% prior; CPI Ex-fresh food (core) Y/Y: -0.4%e v 0.0% prior, CPI Ex-fresh food/energy (core-core) Y/Y: -0.1%e v +0.4% prior
  • 23:00 (CN) China to sell 50-Year Upsized Government Bond
  • 23:00 (CN) China to sell 3-month Bills
  • 23:30 (JP) Japan to sell 3-month bills


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