Macro Matters: Huw Worthington on ECB, Gilts and Rate Outlook

Bloomberg Intelligence Chief European Rates Strategist Huw Worthington joins Ira Jersey on this Macro Matters edition of the FICC Focus podcast to discuss the latest moves from the European Central Bank, the Bank of England and global rate markets. Worthington explains why the ECB’s recent rate hike may already look too aggressive now that oil and gas prices have fallen back, and why the market may be overpricing further tightening if euro-area inflation undershoots target in 2027 and 2028. The two also examine why Europe’s growth backdrop remains weaker than the US, how the ECB’s single inflation mandate differs from the Fed’s broader framework, and why those differences matter for yield curves and market pricing. They also discuss the UK gilt market, including the impact of political turnover, fiscal constraints and leadership changes on long-end yields, as well as the outlook for peripheral spreads in Europe. The episode closes with a look at anomalies in US SOFR curve pricing, including why Bloomberg Intelligence sees current expectations for multiple Fed hikes, followed quickly by cuts, as difficult to justify.