EGBS: Bund Futures Easing Back Toward Session Lows As Equities Recover

Konstantinos Tasoulas has been elected as the next Greek President in the fourth round of voting in the country's parliament. Tasoulas hails from the same centre-right New Democracy (ND) party as PM Kyriakos Mitsotakis and since 2019 has served as President (speaker) of the Hellenic Parliament. 

• The Greek presidency is a largely ceremonial role. The president serves as commander-in-chief of the armed forces and also comes to the fore during and after elections to facilitate coalition talks if no single party has won a majority. The next parliamentary election is not due until spring 2027.
• The election of Greek presidents is indirectly carried out by lawmakers in parliament. In the first and second rounds, a supermajority of 200 out of 300 members is required to elect a president. With ND holding 156 seats this was impossible, as was the 180 seat threshold required in the second round. In the fourth round, the threshold drops to a simple majority of 151.
• In the event, 160 lawmakers backed Tasoulas, with 34 supporting centre-left PASOK-KINAL candidate Tasos Giannitsis, 29 for far-left SYRIA's Louka Katseli, and 14 for the far-right Niki's Konstantinos Kyriakoy. A total of 39 abstained by voting present and 24 lawmakers were absent. 

• EUR Benchmark (MNI expects a E8-10bln size) of the new May-56 OAT
• Revised guidance: May-55 OAT +5bps +/-1 WPIR (was + 7bps area)
• Books above €100bn (including €2.84bn JLM interests)
• Issuer: Republic of France
• Ratings: Aa3 (Moody’s Stable)/AA- (S&P Stable)/AA- (Fitch Negative)/AAh (DBRS Stable)
• Format: OAT (in dematerialised book entry form), RegS Cat 1, 144A eligible, CACs
• 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 open, today's business

GBP/USD's strong rally off yesterday's lows means the pair has now retraced over 50% of the post-BoE decision losses, putting the price within 100 pips of last week's highs.

• This signals that markets are taking Mann's views at face value this week - and that her vote for 50bps last week isn't the beginning of series of votes for aggressive easing given her preference for restrictive policy (we gauge bank rate as being ~100bps above her top estimate of neutral, therefore leaving little room for sizeable cuts).
• More broadly, the negative bias toward GBP/USD persists. Our CFTC positioning dashboard has GBP's 52w Z-score at -1.52, signalling positioning momentum is the second most-negative in G10 after NZD. This is reflected in the bias toward downside protection in GBP/USD this year: the shift lower for 3m risk reversals in January has largely stuck, mirrored in demand for OTM puts - we've tracked near $3bln cumulative notional traded across 1.22 puts in the past month, again cementing the market's concern over GBP downside risks.
• It's these factors that may provide asymmetric upside risks to GBP on strong data releases ahead - particularly data covering consumption, a driver of the weak demand that helped trigger Mann's vote for 50bps last week. Prelim Q4 GDP data crosses tomorrow morning.