Receive 1Y1M EUR OIS

Following the latest upside surprise on US inflation, which has once again shift ed the Fed's rate cut expectations, EUR rates have suffered a major spillover effect as investors doubt the ECB's ability to act independently of the Fed. Market pricing of the nominal neutral rate appears to be exaggerated for the time being . Looking at the EUR 1M OIS 1Y forward as a proxy for a market estimate for the neutral rate, it has increased by 75 bps since early January to around 2.75%. ECB nominal neutral rate estimates are now close to 2%. Even if we consider that this neutral rate should be structurally 50 bps higher than before the Covid-19 period, i.e., between 1.5% and 2.5%, the 2.75% pricing still seems excessive given the fundamentals in the eurozone , notably the inflation oulook . We receive the 1Y1M EUR OIS (entry: 2.76%, target: 2.25%, stop-loss: 3.0%, horizon: 3m).