Summary

• Mixed signals from Christine Lagarde are suggesting a more balanced view from the ECB, potentially with more focus on growth after new PMI data.
• Meanwhile, UK gilt yields are likely to keep a material risk premium as we head into a period of economic policy uncertainty.
• The eurozone composite indicator is expected to nudge up slightly from 48.5 to 49.2, which would still be in contractionary territory.

By Benjamin Schroeder, Senior Rates Strategist and Michiel Tukker, Senior UK & Eurozone Rates Strategist

A more balanced ECB view could increase focus on growth dynamics

The market is staying optimistic about the developments