ECB: Market prices aggressive hikes on energy risks – Commerzbank
Commerzbank’s Hauke Siemßen highlights that hawkish ECB commentary and the Iran-related energy shock have pushed money markets to discount three full ECB rate hikes by year-end and an 80% probability of a first move in April. Upcoming ECB wage data and the Survey of Monetary Analysts could refine expectations, but growth indicators may be sidelined for now.
Hawkish pricing builds into April meeting
"After the rather hawkish ECB sources and official remarks, forwards are now pricing three full rate hikes until year-end and an 80% chance for the first hike in April. At the April meeting, only few data pointers for March will be available, which would render a potential hike a risk management exercise and a sign of commitment to stay ahead of the inflation-curve. More hawkish leaning council members like Nagel seem in favour of an April hike, while centrists council members should ultimately tip the balance. Remarks from this week's ECB Watchers Conference may shed more light on the different perspectives within the ECB."
"On the data side, today's ECB wage tracker and the results of the Survey of Monetary Analysts (SMA) for March will be made available. As the SMA's cut-off date was on 6 March, expectations for longer-term inflation and the ECB policy reaction may become intriguing. The PMIs on Tuesday and Germany's ifo may receive less attention than usual in the current environment, and with markets firmly focused on the fallout of the energy price rally."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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1. Technology stocks fell sharply as investor interest shifted toward energy and selected defensive assets. From October 10 to 16, the Nasdaq 100 declined 5.49% and the S&P 500 fell 1.95%, while the Dow gained 0.67% and WTI crude rose 10.41%. BTC, ETH, and SOL declined 1.27%, 2.65%, and 4.44%, respectively. This week's technology earnings will be an important test of whether revenue growth, margins, and cash flow can justify current valuations. Better-than-expected results could help stabilize markets in the near term. 2. Crypto continues to see pockets of strong activity, but a broad-based altcoin season has yet to materialize. CoinMarketCap's (CMC) Altcoin Season Index stood at 54 as of the October 18 UTC daily observation, below the altcoin-season threshold of 75, while BTC dominance rose to 60.08%. Our proxy leverage ratio fluctuated between 4.00 and 4.07 during the week, showing no sustained increase and suggesting limited appetite for additional leverage. Meanwhile, as major exchanges expand access to traditional financial assets, the recent sell-off in AI-related equities could attract short-term speculative capital away from crypto. Such capital rotation could make it more difficult for a new altcoin season to take hold. 3. Papertrade's loss-to-mine model has generated significant interest across the crypto community. The protocol combines high-leverage derivatives trading with zero slippage and a mechanism that rewards trading losses with PAPER tokens. Across the eight complete UTC days from October 10 to 17, cumulative reported revenue reached approximately $56.08 million, including $51.90 million distributed to token holders. With growing participation from key opinion leaders (KOLs), Papertrade has reportedly ranked among the top three platforms by profitability in the broader market recently. Assets to watch: BTC, ETH, SOL, ARB, OP, SKHYNIX, SKHY, META, TSLA, LRCX, and SPCX. Key research priorities this week: Cash flow performance in technology earnings; the relative discount and holding costs of the two SK Hynix contracts; and U.S. initial jobless claims and PMI data. Weekly market data cover the period through October 16, while research information was verified through October 18. Observation periods are specified separately for each chart.
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