CREDIT SUPPLY: Legrand (LRFP NR/A-/NR): Final Terms
Mar-12 12:45
* Final terms: EU500m WNG 10Y at MS+98 (BBG). * Guidance: MS+100-105. * IPT: MS+130-135. * Books abo...
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EUROPE: German Economy Minister Reiterates Stance on Counter Tariffs
Feb-10 12:24
- "GERMAN ECONOMY MINISTER HABECK: EUROPE MUST RESPOND TO TRADE RESTRICTIONS, WE ARE PREPARED FOR THIS" (RTRS)
- Worth noting nothing new on that Habeck headline, after stating last week that if Europe cannot convince President Trump, "then Europe will have to react as Canada and Mexico are prepared to do: with counter-tariffs".
- Perhaps separately, EURUSD has extended its pullback in the last few minutes to 1.0310 from the earlier 1.0337 highs in early European trade, amid a notable bid filtering through for the broader greenback. 1.0272, the Feb 04 low is the immediate support level of note.
OUTLOOK: Price Signal Summary - Bull Cycle In Bunds Remains In Play
Feb-10 12:12
- In the FI space, Bund futures remain in a bull cycle and the contract is holding on to its latest gains. The recent pause appears to be a flag formation - a bullish continuation signal. Price has recently cleared both the 20- and 50-day EMAs. The break higher confirms a resumption of the corrective bull cycle that started Jan 14. Sights are on 133.73, 50.0% of the Dec 2 - Jan 14 bear leg. First support is at 132.53, the 20-day EMA.
- A bull cycle in Gilt futures remains in play for now, signalling scope for a continuation higher near-term. Last week’s extension has reinforced current conditions. The contract has traded through 93.09, the Dec 20 high, and breached 93.64, the 61.8% retracement of the Dec 3 - Jan 13 bear leg. Sights are on the 94.75, the 76.4% retracement. Initial firm support lies at 92.50, the 20-day EMA.
UK: Week Ahead
Feb-10 12:10
- The week ahead sees speeches from Catherine Mann (possibly the key event of the week) on “Economic prospects” tomorrow – see full preview earlier. There will also be a speech from Governor Bailey on “Are we underestimating changes in financial markets” tomorrow – that will be watched but he may not address monetary policy directly.
- Megan Greene will follow up with a speech on Wednesday at the Institute of Directors. With Mann having switched sides, it is thought that either Greene or Pill remains as the most hawkish member of the MPC. Both have voted for cuts in both November and February and Greene’s speech will be watched for any evolution of her views – although without a notable change in stance at present it seems unlikely her vote is likely to be the one to bring about a potential sequential cut, so if she maintains a hawkish tone it’s unlikely to impact market pricing too much.
- On the data front, we have seen the KPMG-REC survey point to more subdued conditions in the labour market (it was released overnight – see our summary at 00:01GMT). Tonight will see BRC retail sales released, with the first print of Q4 GDP due on Thursday, alongside monthly activity data for December. Consensus expects monthly GDP to rise 0.1% M/M following a disappointing 0.1% in Nov and -0.1% in Oct. On a quarterly basis consensus expects GDP to fall -0.1%, in line with the BOE's latest projection. However, unless we see downward revisions to earlier months, the monthly and quarterly consensus numbers don’t add up. Assuming no revisions to November and October monthly data, we would need a December GDP print in the range of -0.23% and 0.07% M/M for a Q4 GDP at -0.1% Q/Q. Consensus currently looks for 0.1%M/M – so only a very soft 0.1%M/M print is consistent with the quarterly print. Note that, a monthly print between 0.07% and 0.37% would result in a flat Q/Q GDP print, while a print above 0.37% M/M would get a Q4 quarterly reading of 0.1% Q/Q or higher. Looking ahead, GDP growth is expected to remain sluggish, with the BOE projection for 2025 being downgraded to 0.75%.
