OIL: Kazakh and Ukraine Officials Set to Discuss CPC Attack

• The Banking sector leads in Europe, SX7E Index makes a new 9.5yrs high, highest since August 2015, and this chart is one of the more interesting one going into 2025.
• The main upside of interest is at 163.34, the 2014 high and also the highest printed level since November 2011.
• SX5E is also making new 20yrs High (highest since Sep 2000), and the next hurdle will be eyed at 5200.00, now trading at 5160.00.

(Chart source: MNI/Bloomberg).

• 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.