Diminishing risk of recession means higher-for-longer interest rates are becoming a reality

The deposit rate in the Euro area is expected to come back down to 3% and remain at this level for the rest of the decade

In the Euro area, rate cuts of 100bps are priced in for 2024-25.

Market attention this year has been very much focused on hikes in central bank rates and when they might end. 

Futures contracts indicate that traders believe US rates have now reached a peak and the ECB will deliver just one more hike this autumn. There has been little change in this view over the past couple of months.