Pay Feb-25 ECB OIS

The EUR curve is very influenced by bets on US recession fears and a weakening of the labour market. I nvestors are putting a significant weight on a similar macro scenario i n the eurozone . However, w e don’t see a strong weakening of the eurozone labour market, and the ECB is still expecting high wage growth until the year-end , especially in Germany. The recent ECB communication suggests that inflation still needs to show further signs of improvements before cutting more aggressively . The most hawkish members in the Governing Council will be speaking next week (Knot, Nagel, Schnabel, Simkus , Muller) and could remind us of the upside risks to inflation, which are not yet comforting the ECB . This may lead to a slight repricing of the front-end. Next week, EZ core CPI will also be key (to be released 30/08). We recommend paying Feb - 25 ECB date d ( entry: 2.8 0 %; target: 3.15%; stop: 2.70% ) .