Welcome to the Q1 2025 Review edition of THE TREASURY HUB Banking Markets Bulletin.
- The focus of markets over 2024 was on inflation and its impact on the expected timing of interest rate cuts. While tariffs would most likely drive inflation up again, the primary concern of markets is increasingly on the prospect of a recession.
- 3-month Euribor continues to fall over the quarter as expected in line with the actual (and ongoing) cuts in the ECB Base Rate. The ECB Deposit Rate was cut from 4.00% to 3.00% in 2024 and has been cut a further three times in 2025 to date (most recently on April 23rd) to its current level of 2.25%.
- The shape of EUR, UK and US yield curves has moved from “inverted” (i.e. rates decline after 1 year) to “normal” as the quarter has progressed indicating the bottom of the interest rate cycle will be reached in 2025 after which rates could move upwards in due course in a regular interest rate cyclical pattern
- Oil prices have declined in line with increasing concerns about a recession (lower economic demand leads to lower manufacturing output) and sits around $65 per Bbl at the minute.
- Gold continues on its amazing run and is currently up over 27% in the year to date
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