TURKEY: Markets Roiled by Arrest of Opposition Leader, TRY Drops as Much as 10%

• The Dollar finds a broader bid, price action is mostly Germany Long end led, 10yr and 30yr, although similar drag lower are witnessed in shorter End STIR contracts.
• The push in Tnotes (higher Yield) sees the Dollar testing intraday highs against the INR, MXN, KRW, CNY, CZK, EUR, PLN, ZAR, CAD, while JPY, CNH, AUD and NZD are seeing some offers.
• Bund is so far finding some support right on the 2.50% Yield level, 2.499% is the printed high.

Swiss sport-event and seasonally-adjusted real GDP growth was +0.4% in Q4 2024, according to the flash estimate from local statistics office BFS. This compares to a consensus estimate of +0.3%, and represents a pickup from Q3's rate of +0.2%.

• This brings in 2024 growth at 0.8% in 2024 overall, after 1.2% 2023. "This is well below Switzerland's average economic growth (1.8% since 1981), reflecting the subdued performance of major trading partners. The industrial sector recorded moderate growth overall, supported primarily by the chemical and pharmaceutical industry. The services sector grew at a below-average rate by historical standards."
• For 2025, MNI's sellside consensus sees Swiss growth at +1.3% Y/Y, but the estimate was downwardly revised by 0.15pp during the last three months.

SONIA futures lightly outperform Euribor counterparts, but are nonetheless pressured by this morning’s core FI pullback. Futures are -0.5 to -5.0 ticks through the blues at typing, with Z6 piercing last Thursday’s low of 96.105.

• Fallout from weekend speculation around a US-brokered peace deal between Russia and Ukraine appears to be factoring into the selloff in core EGBs.
• BoE-dated OIS price 54bps of easing, up to 2.5bps more hawkish than Friday’s close. The next full 25bp cut is priced through the June gathering (29bps of easing priced).
• Over the weekend, the FT reported that the OBR’s assumptions around UK productivity growth may be too optimistic, which could force the Chancellor into more fiscal tightening in the coming years. However, the report offers no concrete details on potential policy changes.
• The Government is also assessing the case for tariffs on some US products if President Trump’s 25% aluminium and steel levies are implemented next month.
• This week’s UK calendar is headlined by the January inflation and December/January labour market reports, with the February flash PMIs also due on Friday.
• It is debatable whether inflation or PMI data are the primary focus right now (official labour market data seems to have fallen behind these in the pecking order but still has potential to cause large market moves on surprises).
• MNI’s full inflation/labour market preview will be released later today.