CNB: Governor Michl Flags Ongoing Studies On Crypto Investments

• The EUR is seeing broader base buying, testing intraday highs against the CAD, GBP, NOK, JPY, CHF, AUD and the SEK, while the EURUSD still lags somewhat, it is still leading and is up 0.40% on the day.
• After mostly seeing a mixed overnight session for the EUR, it is now in the green versus most G10s.
• EURGBP is testing the immediate resistance right here at 0.8463 High Jan 15, ahead of the next area of interest at 0.8471 61.8% retracement of the Aug 8 - Dec 19 downleg.

10-year EGB spreads to Bunds are within 0.5bps of Friday’s closing levels, with GGBs modestly outperforming. 

• The OAT/Bund spread remains at 78bps, following last week’s general policy address and unsuccessful censure motion against the Bayrou government.
• PM Bayrou’s survival has removed some short-term political uncertainty, allowing a little risk premium to be priced out of OATs (the spread reached a closing high of 84bps last Monday).
• However, medium-term political and fiscal risks remain prevalent in France and the passing of a budget (touted for the end of January) is the next hurdle for Bayrou.
• The BTP/Bund spread is currently 111bps. Last week’s softer-than-expected US CPI drove a pullback in year-end ECB implied rates and a renewed rally in European equities, helping the spread fully unwind its early-January widening.
• A reminder that MNI looks for syndications from Austria, Finland and Spain this week. Books are already open for today’s dual-trance 3/10-year EFSF transaction.

Skittish early Monday trade, with EGBs digesting familiar rhetoric from the hawkish wing of the ECB (Schnabel & Holzmann), while looking ahead to Trump’s inauguration.

• German & UK yields within 1bp of Friday’s close across the curve.
• The observance of the MLK holiday in the U.S. means that cash Tsys are closed until Asia hours.