US 10YR FUTURE TECHS: (M5) Trend Needle Points North

EXECUTIVE SUMMARY: 

• The Riksbank Executive Board voted unanimously to cut the policy rate by 25bps to 2.25%. This brings the policy rate in line with the December MPR rate path’s “terminal rate”, and also the mid-point of the Riksbank’s 1.5-3.0% nominal neutral rate range.
• The policy statement did not contain explicit forward guidance for further rate cuts, noting that “the forecast for the policy rate made in December essentially holds, but the Executive Board is prepared to act if the outlook for inflation and economic activity changes”. This was in line with the expectations in MNI’s preview, but some analysts had expected hints of another cut in H1 2025.
• Although the Governor did not respond to a question on the balance of risks to the December rate path, we think the use of “prepared to act” in the policy statement is clearly focused on the case for more cuts, rather than a surprise pivot to hikes.
• As noted in our preview, we continue to believe the Riksbank will be happy to cut rates below 2.25% if justified by the incoming data. 

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Commerce Secretary nominee Howard Lutnick continues testimony to the Senate Commerce Committee for his nomination hearing. LIVESTREAM

• Lutnick says he “takes a very jaundiced view of China” adding he believes they “seek to harm us so we need to protect ourselves and drive innovation.”
• He says: “We need to stop helping them,” claiming that DeepSeek used Nvidia chips and open-source US AI technology to build their models: “If they’re going to compete with us, let them compete but stop using our tools to compete with us. So I’m going to be very strong on that.”
• Lutnick says he is “thrilled” to oversee the Bureau of Industry and Security, the department responsible for export controls. Say he will empower BIS with “tariffs that will improve the strength, when we say ‘no’ – the answer’s gotta be no.”
• Asked: "Can you commit to the American people that prices will not go up?"
• Lutnick says: "The economy of the US will be much, much better. A particular product's price may go up, but all of them are not inflationary," adds: "It is just a nonsense that tariffs cause inflation. It is nonsense."
• Lutnick references India and China in support of his assertion, "the two countries with the most tariffs and no inflation." 

The Bundestag has approved a conservative Christian Democratic Union (CDU) motion regarding a five-point plan to end illegal immigration by 348 votes to 345 with 10 abstentions. The motion passed with the support of the far-right Alternative for Germany (AfD) and the pro-business liberal Free Democrats (FDP). The motion is not legally binding on the gov't of Chancellor Olaf Scholz. 

• A more consequential vote is set to come on Friday 31 Jan. As The Guardian reports, the passage of the motion will "greatly escalate tensions between the CDU and Scholz’s government and would give Merz the upper hand in terms of trying to push the motion into law, the process of which could start as early as Friday."
• Friday's 'Influx Limitation Law' looks likely to pass given that the left-wing nationalist Sahra Wagenknecht Alliance (BSW) - whose 10 deputies abstained today - has indicated it will support the legislation.
• Once passed by the Bundestag, backing from the Bundestrat (upper house) would be required.  The Guardian reports: "The earliest date for a next sitting of that house would be 14 February, nine days ahead of the general election. However, they are not likely to approve it because the CDU/CSU does not have a majority there."
• Post-election, with the CDU/CSU likely to be in a position to lead the next gov't the legislation could make a return. The CDU's coalition partners - likely the centre-left Social Democrats or Greens - could look to dilute the legislation.