PERU: BCRP On Hold At 4.75% Amid Caution On Global Risks
Mar-14 10:00
- The BCRP left its reference rate unchanged for a second successive meeting at 4.75% last night, in line with the majority of analyst expectations. A minority of analysts had expected a 25bp cut. Despite the decline of inflation in February, the accompanying statement suggests that resilient domestic activity and uncertainty over the global economic outlook prompted the Board to maintain its cautious stance. Nonetheless, it remains in a data dependent mode, keeping the door open to a potentially final cut in the coming meetings.
- The Board noted that risks to global economic activity have increased due to the “high uncertainty” regarding trade restrictions, prompting high volatility in financial markets. On the domestic front, economic activity is still “around its potential level” as all expectation indicators remained in “optimistic territory” for a second month. On inflation, the headline rate is expected to fall towards the bottom of the 1-3% target range in March, before eventually returning to around the 2% mid-point. Core inflation is seen remaining around 2% ahead.
- Overall, the committee reiterates that future rate adjustments will depend on new information about inflation, particularly core inflation, inflation expectations and economic activity. Analysts still see scope for a further 25bp cut in the meetings ahead to a neutral level, dependent on external developments. The next MPC meeting is on April 10.
- Link to BCRP policy statement here.
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EGB SYNDICATION: France new 30-year OAT: Spread set
Feb-12 10:00
- Spread set at 3.25% May-55 OAT + 4bp (guidance: was 7bps area then revised to +5bps +/-1 WPIR)
- Size: EUR Benchmark (MNI expects a E8-10bln size) of the new May-56 OAT
- Books above E110bln (including E2.84bln JLM interest)
- Maturity: 25 May 2056
- Settlement: 19 February 2025 (T+5)
- Coupon: Fixed, annual ACT/ACT, payable each 25 May. Full first coupon on 25 May 2025
- Bookrunners: BNPP (DM and B&D) / Citi / DB / JPM / SG
- Timing: Books tol close at 11:30GMT / 10:30GMT. Pricing later today
Details from market source
US TSY OPTIONS: TYH5 107.00/106.00 Put Spread Lifted
Feb-12 09:59
TYH5 107.00/106.00 put spread paper paid 0-01 on 10K, covered mostly vs. 109-00.
GERMAN AUCTION PREVIEW: 0% Aug-50 Bund / 2.50% Aug-54 Bund
Feb-12 09:55
This morning, Germany will hold its second 30-year Bund auction of the year. On offer will be E1bln of the 0% Aug-50 Bund (ISIN: DE0001102481) and E1.5bln of the on-the-run 2.50% Aug-54 Bund (ISIN: DE000BU2D004).
- The size is a consistent with recent Bund auctions in the 30-year segment.
- Recent auctions in the German 30y segment have passed smoothly, with solid bid-to-covers (in a 1.83x to 4.50x range since July), bid-to-offers (1.48x to 3.69x range since July) and the low prices above the secondary market mid-prices throughout 2024.
- For the last 0% Aug-50 Bund auction on 16 October, the bid-to-cover stood at 2.24x, while the bid-to-offer came in at 1.84x. For the last 2.50% Aug-54 Bund auction on 15 January, the bid-to-cover stood at 2.76x, while the bid-to-offer came in at 2.19x.
- The political situation in Germany is characterized by some uncertainty at the moment amid snap elections being scheduled for February 23. TV debates have passed without material turmoil in the last couple of days and the mainstream parties are expected to be able to form a government together - so we expect no impact from that on today's auction.
- The next German auction will be E4.5bln of the 2.20% Mar-27 Schatz (ISIN: DE000BU22080) on February 18, while further openings of both Bunds on offer are not scheduled yet.
- Note that we are also expecting a German 30-year Bund syndication at some point (likely in Q1). Tomorrow would be very unlikely now given the auction today, but we see a good chance over the next couple of weeks.
- Timing: Results will be available shortly after the bidding window closes at 10:30GMT / 11:30CET.
