• “We now expect ECB to hike 75bp next week, which will be followed by 50bp in October and 25bp in December, but acknowledge the increased uncertainty on the two latter hike size expectations. This is +25bp for our previous rate hike expectations at both the September and the October meetings, respectively, and we now see the endpoint of the ECB deposit rate at 1.5%.”
  
  “We believe the euro area will face a recession and ECB will hike into that, however, we also acknowledge that even without the ECB tightening, the European economy was in a severe situation to begin with a worsening energy crisis.”

To say that power prices have gone parabolic may be underselling it a bit. This is more like a rocket ship taking off. As much German officials are maintaining that they have sufficient gas storage levels to hold for winter, recent energy developments in the region aren’t going to provide much comfort if this means that we will have to run through the same predicament again next year – which looks almost certain.