BELGIUM T-BILL AUCTION PREVIEW: On offer next week

Today’s extension higher in TTF futures (albeit off highs at typing) sees shorter-dated Euro inflation swaps move to unchanged on the session, though the 5y5y inflation swap remains close to intraday lows of ~2.08%.

• The January increase in natural gas prices is unlikely to sway near-term ECB policy rate expectations, with policymakers largely endorsing market pricing for 25bp cuts in January and March ahead of tomorrow’s decision.
• The ECB will likely be able to look through increases in energy prices if they are (1) small enough and/or (2) deemed to be temporary. However, more persistent rises would raise concerns around second-round effects, which could bleed into core inflation metrics.
• The current TTF futures price of over E50/MWh is well above the E42.9/MWh assumption for 2025 overall in the ECB’s December projections, so current levels would imply an upward revision to the bank’s headline inflation projections, all else equal.
• Recent energy moves may be assessed in more detail at tomorrow’s press conference. On January 22, President Lagarde noted that “data [in H1 2025] is going to be fascinating, as I said, the price of energy is going to be something that might have a real impact".
• See here for MNI’s ECB preview

OI data points to ~4K net shorts being added in gilt futures during yesterday’s sell off, which adds to (what believe to be) a net short bias amongst fast money accounts, built since the start of the year.

• Zooming out, structural positioning is essentially flat in the contract, as indicated in the latest MNI Pi (Positioning Indicator) report, released Tuesday.

• EURJPY is quickly heading towards the previously mentioned next support seen just below the figure at 160.96, the 21st January low.
• The push lower in Equity could be somewhat supporting, although not really seeing any spillover into the likes of the Swissy, and no real movement for Yen against the Dollar, so unlikely.
• GBPJPY is also through its session low, but this Week's low is still further out, down to ~192.08.