ECB expected to cut rate by another 10bp

European inflation expectations according to the 5Y5Y inflation swaps are stuck close to their lowest levels since February, i.e. since before the ECB commenced buying bonds in March. 

This helps underpin speculation that the ECB will further expand stimulus. 

The market has not only bet in the direction of a QE expansion, it has also bet in the direction of further rate cuts, with roughly a 40% likelihood seen for another 10bp deposit rate cut by the ECB.

"As for today, should Fed Williams today hint that a delayed of the first Fed hike has become more likely, the pressure on the ECB, and on many other central banks, to do more will intensify", says Nordea Bank.