AUSTRIA: Moderate Party Leaders Meet w/Pres After Gov't Talks Collapse
Leaders of the four main moderate parties in the National Council have been meeting with, or are scheduled to meet, President Alexander van der Bellen today. This follows the collapse of coalition talks between the far-right Freedom Party of Austria (FPÖ) and the centre-right Austrian People's Party (ÖVP) on 12 Feb. Van der Bellen has already met with the leaders of the environmentalist Greens, liberal NEOS, and the ÖVP. Andreas Babler, leader of the centre-left Social Democrats (SPÖ) is currently speaking to the press ahead of his meeting with the president.
- Van der Bellen, an independent who formerly led the Greens, has said he is taking the meetings to determine what options for gov't might be successful. The four apparent options are: - re-starting talks between the ÖVP, SPÖ and NEOS that previously broke down late in 2024, forming a minority gov't propped up in a confidence and supply agreement, imposing a technocratic gov't of experts, or calling snap federal elections.
- On the prospect of snap elections, as AP reports "due to legal requirements and deadlines, that is unlikely to happen before June."
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STIR: BoE Pricing Moves Towards 40bp Of Cuts For '25
GBP STIRs are a little more hawkish on the day.
- 40.5bp of cuts priced through year-end vs. last week’s extreme of ~39bp, ~2bp more hawkish on the day.
- SONIA futures little changed to -2.5, with some of last week’s lows pierced.
- Chancellor Reeves did little to placate fiscal concerns earlier today.
- CPI data eyed tomorrow, click for our full preview.
- BoE dovish dissenter Taylor will speak later on Wednesday (16:30 London).
- It will be interesting to see whether Taylor explicitly addresses the change in market prices, given the moves since the release of the BoE’s MPR forecasts.
- The views of the three dissenters in the December MPC Minutes described the “sluggish demand and a weakening labour market, now and in the year ahead, both of which would see further downward pressure on demand, wages, and prices.” And noted that “given the evolving balance of risks, a less restrictive policy rate was warranted” in the view of the three dissenting members.
| BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
| Feb-25 | 4.547 | -15.3 |
| Mar-25 | 4.531 | -16.9 |
| May-25 | 4.451 | -24.9 |
| Jun-25 | 4.416 | -28.5 |
| Aug-25 | 4.354 | -34.6 |
| Sep-25 | 4.347 | -35.3 |
| Nov-25 | 4.306 | -39.4 |
| Dec-25 | 4.295 | -40.5 |
EQUITIES: EU Bank more outright Put buyer
SX7E (21st Mar) 130p, bought for 0.80 in 6k.
EQUITIES: EU Bank put buyer
SX7E (21st Feb) 145p, bought for 1.50 in 10k.
