ING’s latest rates strategy note argues equity markets remain complacent, while bond markets are already repricing the inflationary consequences of higher oil and a prolonged Hormuz disruption.
- With Brent back above $100, ING sees both the ECB and BoE hiking at least twice this year if prices stay elevated.
- A move to $110 oil could push 2Y EUR swaps to 3.0%, 2Y GBP above 4.4%, and the U.S. 10-year above 4.5%.
- ING notes equities are still near highs, but warns that every extra day of disruption raises the chance of a sharp risk-off reversal.
- Food inflation via fertilizer costs is flagged as a second-round risk.
Something may have to give: either energy stress eases—or markets force policymakers to respond.
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