We watch the ECB most closely because market expectations for the meeting have fluctuated materially in the past week or two. The US Federal Reserve (Fed), European Central Bank (ECB) and Bank of England (BoE) will all set policy. But this month should bring more focus, with key central banks announcing rate decisions in the next few weeks.

G10 markets have had a choppy, volatile summer characterised by rangebound and challenging trading conditions. For those without access to the €STR OIS market, we would proxy with a short-term tactical short position in the 2-yr German Schatz.With so little priced for the September meeting, the risk/reward payoff is very attractive. For readers with access to the wholesale over the counter (OTC) markets, we see value in paying the September ECB-dated €STR OIS.Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more. This article is only available to Macro Hive subscribers. Consequently, heading into the ECB meeting, we favour taking tactical positions to benefit from a potential ECB rate hike not priced by markets.That is down from the ~14.5bp (or ~60% probability of a 25bp hike) seen in the run-up to Jackson Hole and immediately after the release of German inflation data last week.The net result is that the market now prices only ~6 basis points (bp) of tightening (or a ~24% probability of a 25bp hike) for the September ECB rate decision.Last week saw whipsaw moves in market pricing for the ECB rate decision on 14 September.

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