Future of the European money market: Experts expect aggressive interest rate cuts

Future of the European money market: Experts expect aggressive interest rate cuts

According to a report by www.n-tv.de, the rates on the European money market started the week hardly changed. Expectations of future ECB interest rate cuts remain high, even if they have recently been dampened. According to Commerzbank's interest rate strategists, aggressive interest rate cuts are being priced into the money markets. Shortly after Christmas, STR futures contracts priced in rate cuts of 175 basis points by the end of 2024. This value has now fallen to 145 basis points, but Commerzbank believes it is still too ambitious. Here is the latest data: daily allowance: 3.82 - 4.10 (3.80 - 4.15), weekly allowance: 3.82 - 4.10 (3.80 - 4.15), 1-month allowance: 3.83 - 4.11 (3.78 - 4.20), 3-month allowance: 3.85 - 4.05 (3.80 - 4.20), 6-month money: 3.40 – 4.00 (3.78 – 4.12), 12-month money: 3.50 – 3.75 (3.42 – 3.77), Euribors: 3 months: 3.9250 (3.9360), 6 months: 3.9290 (3.9120), 12 months: 3.6160 (3.5840).

The European money market started the week relatively stable, and the ECB interest rate cuts remain an important topic for the financial markets despite slight corrections. Expectations of aggressive interest rate cuts are high and forecasts for the coming years point to continued loose monetary policy. From an investor perspective, these developments may have an impact on the bond market, particularly on government bond yields and prices. If monetary policy continues to be accommodative, yields could remain low, which could prompt investors to look for alternative investment opportunities.

With regard to the current daily and weekly money rates as well as the Euribor data, it can be observed that interest rates have remained relatively stable overall. Interest rates for different maturities show little change compared to previous data, indicating some stability in the short-term money market. This can be interpreted as a positive signal for the liquidity situation in the financial sector.

Overall, it can be said that current developments on the European money market continue to be influenced by expectations of ECB interest rate cuts. These expectations can affect the bond market and short-term interest rates and should therefore be monitored closely by financial professionals and investors to adjust investment strategies accordingly.