Traders Increase Bets on ECB Easing, Pricing 150 BPS Cuts in 2025 After Weak Eurozone PMI Data

Recent PMI data for the eurozone, particularly from France and Germany, has led traders to increase their bets on further ECB easing. The weak French PMI has been a significant factor, prompting money markets to price in a 50 basis points rate cut by the ECB in December 2024, up from less than a 20% chance before the data was released. Additionally, traders are now pricing in 150 basis points of ECB cuts in 2025 for the first time since October. The ECB deposit rate is expected to be around 1.85% in July, down from 1.95% before the PMI data. There is now a 35% chance of a 50 basis points rate cut in December 2024.