BASIC INDUSTRIES: Metso (OTEVFH Baa2/BBB/NR): 4Q24 Results

Modest dovish moves in GBP STIRs this morning, with core global FI markets edging away from yesterday’s lows.

• SONIA futures flat to +2.0, last week’s cycle lows intact across the strip.
• The BCC’s latest survey provided further signs of a slowing labour market, with ~1/6 of firms trimming hiring in late ’24, representing the highest such share seen since early ‘21
• Tomorrow’s inflation readings headline this week’s UK data calendar.
• We see some risk that air fares reverse some of the softness seen in November - although this is very dependent on the survey date. We assume the survey date was 10 December but if it is 17 December there are risks of a higher print. We will publish our full CPI preview later today.
• Comments from BoE’s Breeden are due again today, but as is the case with most of her speeches, there is unlikely to be much on monpol here. She is giving the keynote speech at the Financial Stability Law Forum’s ‘financial stability and too big too fail’ symposium in Zurich.
• More focus will be placed on Chancellor Reeves’ appearance in the Commons, with MPs set to question the UK’s fiscal outlook after the recent increase in market-based fiscal risk premia.

Latest French political headlines from BBG: "FRENCH SOCIALIST CHIEF SAYS MAY BE NEAR AGREEMENT WITH GOVT" . This comes ahead of PM Bayrou's general policy speech at 1500CET today.

• The 10-year OAT/Bund spread has tightened ~1.5bps since that headline crossed, now at ~82.5bps.
• Our political risk team noted yesterday that Bayrou's speech is being watched closely for signs of whether he will roll back some of the pension reforms pushed through by President Emmanuel Macron in 2023.
• There has been speculation in recent days that Bayrou could temporarily postpone the gradual raising of the retirement age to 64 in an effort to gain the support of the centre-left Socialist Party (PS) which could be critical in avoiding a successful censure motion.
• However, in appeasing the centre-left Bayrou risks alienating the centre-right.

• The DMO will kick off issuance for the week this morning with GBP1.0bln nominal of the 30-year 1.25% Nov-54 linker on offer.
• This is the first auction of the 30-year linker that was launch via syndication in March for GBP4.0bln nominal and then tapped twice via syndication since: for GBP4.5bln nominal in July and GBP4.25bln nominal in November.
• Demand at all of the syndications has been strong with books getting bigger in each transaction, from GBP56.4bln to GBP66.0bln.
• There has not been a 30-year linker auction since January 2024 (when the previous 0.125% Mar-51 linker was being reopened 1-2 times per quarter via auction). Those auctions we so long ago we don’t think there is much to infer from them.
• However, looking at 14+ year linker auctions in 2024 we note the lowest bid-to-cover was 3.08x, with the PAOF utilised in each of these auctions since June. This is the only 1.25% Nov-54 linker auction planned for this quarter.
• Timing: Results will be available shortly after the auction window closes at 10:00GMT with a further GBP250mln nominal on offer at the PAOF.