3 Curves 3 Stories

Three central banks, three very different curves. One is staring down the labor market, another is paralyzed by optionality, and the third wants to cut but can’t. Add in fiscal largesse, tariffs, and sticky wages and you’ve got a divergence that’s creating real opportunities in spreads, steepeners, and equities.

Here’s how I’m looking at it.

Please note that I’m back from hiatus, please expect high quality research/opportunities daily going forward.

US, EU and UK Step Curves

The front end of the curve has made its call: cuts are coming. October and December are locked and loaded with back-to-back moves. Conviction is high — both priced above 75%. By year-end, the market has ~41bp of easing baked in. That’s your 2025 story: two live cuts, ~40bp total.

2026 is a different beast. The pace slows, the steps shrink. January and March trim another ~20bp, then the curve drips out 5–10bp at a time. By December, the total sits around ~62bp of cuts across the year.

The destination is early 2027: ~106bp in cumulative easing. But the cycle is data dependent, the velocity of cuts will be dictated by how quickly the labor market cracks. Inflation has slipped into the back seat; it’s jobs that will drive the Fed’s hand from here.

The ECB curve isn’t showing much urgency. Through the end of 2025, there’s barely anything priced just ~3bp of easing in total. December is the first real step, with a small ~3bp trim, but conviction is low and the signal is muted. That’s your 2025 story: effectively flat, with the market sitting on its hands.