CREDIT SUPPLY: Legrand (LRFP NR/A-/NR): Guidance

• 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%.

SX5E (21st Mar) 5100/4800ps, bought for 20.2 in 8.4k.

Scandi currencies outperform the G10 basket this morning, with EURNOK and EURSEK each 0.4% lower, extending last week’s selloffs. 

• Bearish momentum in EURSEK has been bolstered by a cross of the 50- and 200-day EMAs, with the cross now through Friday’s low and eyeing the Sep 27th low at 11.2450. Speeches from Riksbank’s Seim, Bunge and Jansson headline the remainder of this week’s Swedish calendar.
• NOK strength comes following the higher-than-expected CPI-ATE reading this morning (2.8% Y/Y vs 2.6% cons, 2.7% prior) and the >4.50% rally in European natural gas futures.
• Our Commodities team point to the risk to gas storage from a drop in temperatures and expected boost to heating demand in NW Europe later this week as drivers of today’s TTF rally.
• EURNOK has pierced 11.6000, a notable pivot level going back to mid-2023, which closely coincided with the Dec 4th low (11.5998) and the 61.8% retracement of the June-August '24 rally (11.5953). This exposes the November 25th low at 11.5192 on the downside.
• Tomorrow sees the release of Q4 GDP (consensus and Norges Bank see mainland GDP at 0.3% Q/Q), before Norges Bank Governor Wolden Bache’s annual address on Thursday evening.