Money markets no longer fully price in one more ECB rate hike by year-end

Pricing of this kind, where terminal rate expectations slip from fully priced to partially priced, has historically been a data-confirmation dynamic rather than a decision signal: the market is not saying the ECB will not hike, it is saying the burden of proof has shifted onto incoming prints. Episodes where pricing softens at the margin tend to follow softer activity data, declining survey momentum, or inflation readings that remove the urgency from the hawkish case, and the sequence usually runs front-end rates first, then the currency as the rate differential narrows. The actors here are the Governing Council's hawks, whose prior form in late-cycle phases has been to resist pricing-out with public comments, and the doves, whose rhetoric gains traction precisely when market pricing validates it. The distinction worth drawing is between a deferral, which keeps one more hike live into the following meeting, and an outright terminal-rate call, which tends to compress the short end of EUR rates against peers more durably. Follow-ons worth noting are hawk pushback from individual officials, the next inflation and wage releases, and whether the repricing is corroborated in Bund curves or confined to EONIA-linked instruments. As a pricing story rather than a statement, the signal is directional but soft.