PERU: Finance Minister Salardi Targets 4% GDP Growth, Aided By Tax Incentives

Bank of America continue to like receiving Dec ECB-dated OIS (target: 1.30%, stop: 2.05%).

• They write “the ECB continues its dovish shift, consistent with the deterioration in the outlook: (1) GDP disappointed; (2) consumers remain cautious; (3) tariff risks weigh on prospects.”
• They believe that the Bank’s “comments on the neutral rates suggest: (1) policy rates are still restrictive; (2) the ECB is not necessarily "only" normalising policy rates.”
• As a result, they see “a low hurdle for 2.00% rates by mid-year, absent any energy price shock”, noting their economists still forecast a 1.50% deposit rate come September.

OEH5 118.00/117.50/117.00 put fly paper paid 11.5 on 8K.

• In the FI space, Bund futures remain in a bull cycle and the contract has traded higher today. Price has recently cleared resistance at 132.22, the Jan 22 high, and is through both the 20- and 50-day EMAs. The break higher confirms a resumption of the corrective bull cycle that started Jan 14. This signals scope for an extension towards 133.73, 50.0% of the Dec 2 - Jan 14 bear leg. Firm short-term support has been defined at 131.00, the Jan 16 / 24 low. First support is at 132.23, the 20-day EMA.
• A bullish corrective phase in Gilt futures remains in play, signalling scope for a continuation higher near-term. Last week’s high print and Monday’s climb, reinforce current conditions. The contract has traded through 93.09, the Dec 20 high. Sights are on 93.64, 61.8% of the Dec 3 - Jan 13 bear leg. First support is 92.17, the 20-day EMA.