MEXICO: Banxico Expected To Deliver Another 50bp Cut Next Week

RXM5 130.50/129.00ps 1x2, bought the 1 for -19 (receive) in 2k.

Hawkish repricing in ECB-dated OIS following Executive Board member Schnabel’s interview with the FT. OIS price 72bps of easing through year-end (vs 76bps before the interview was released). 

• Schnabel’s comments were hawkish leaning, but not overly surprising given her traditional stance on monetary policy. In particular she said “we are getting closer to the point where we may have to pause or halt our rate cuts”
• There are 54bps of cuts priced through the June decision (i.e. more than fully pricing 2x25bp cuts across the next three meetings).
• March pricing is unsurprisingly stickier (23.5bps of cuts priced vs 24bps prior), with a 25bp cut comfortably baked into consensus already. Schnabel said the bank will have a discussion on dropping the reference to policy restrictiveness in March, but did not provide any further signals for the decision.
• Euribor futures now -1.5 to -4.5 ticks through the blues.

• Spread set at MS+130bps (guidance was MS + 140bps area)
• Size: EUR Benchmark (MNI expects E2.5-3.5bln)
• Books in excess of €4.75bn (incl. €385mm JLM interest)
• Maturity: 27 February 2040
• Settlement: 27 February 2025 (T+6)
• ISIN: SK4000026845
• Bookrunners: HSBC (DM/B&D) / JPM / Slovenska sporitelna (Erste Group) / Tatra banka (RBI Group)
• Books to close at 12:00 LDN / 13:00 CET