NBP: Governor Glapinski Does Not Expect To Be Outvoted By Colleagues

November's trade deficit - incorporating both goods and services - came in almost exactly in line with expectations at $78.2B (a little higher than October's, which was revised $0.2B lower at $73.6B). 

• Imports rose sharply in nominal terms ($11.6B, biggest increase in 2.5 years), and on a broad-based basis with all categories of imports increasing - reflecting a rebound in a dip in October imports, but also potentially reflecting some front-running of possible Trump administration tariffs.
• We also note that "other" goods exports contracted sharply in November (around one-third), reflecting methodological issues with the Canadian customs authorities after a 75% jump in Oct, and which are likely to be revised out of the series with an annual benchmarking later this year.
• By our estimates, the deficit as a percent of GDP remains above 3.0%, where it has stood since April (after briefly dipping below that mark in 2023), with a roughly 1% of GDP services surplus offsetting a 4.1% goods deficit.
• While the wide trade deficit is to be expected given such robust domestic demand, so far, the external sector's impact on Q4 GDP growth is tracking to be relatively neutral vs Q3. Real goods trade continues to grow at a solid clip, with real exports up 4.9% Y/Y and imports 8.2%.  
• Real goods exports momentum appears to be slowing though, falling by 2.5% in November on a quarterly annualized basis (weakest since Q2 2023), even as imports remain robust (rising 4.6% on that basis in November). Though again, the Canadian export figures may be distorting the picture.
• Within the latter we note that while both consumer and capital goods imports are growing at a solid clip (over 12% Y/Y each in November), capital goods have exceeded consumer goods for most of the last 2.5 years.
• As we have written many times, we see capital goods demand as being broadly positive for longer-term growth dynamics, but the degree to which tariff front-running is affecting the propensity to import is unclear.

Euribor upside, looking for deeper cut into the end of the Year.

• ERZ5 99.00/100.00cs, bought for 2.75 in 6k.

• Size set earlier: E1bln (MNI expected E1.0-1.5bln)
• Spread set earlier at MS+128bp (Guidance was MS+140bps area then MS+135bps area)
• Books in excess of E2.1bln (inc E410mln JLM interest)
• Maturity Date: 14 April 2055
• HR: 93% vs 2.50% Aug-54 Bund
• Settlement Date: 14 January 2025 (T+5)
• Joint Bookrunners: Deutsche Bank, Erste Group, Goldman Sachs Bank Europe SE, HSBC, J.P. Morgan (B&D) and OTP Banka Slovenia
• ISIN: SI0002104873
• Timing: Pricing to follow

From market source