ITALY T-BILL AUCTION PREVIEW: On offer next week

ECB-dated OIS price an implied deposit rate of 1.88% through December, in line with the median analyst terminal rate expectation from our latest ECB review.

• Although Executive Board speakers (e.g. de Guindos, Lane) have played down the importance of the neutral rate in calibrating near-term policy today, the current implied year-end level sits toward the lower end (if not below) most neutral rate estimates.
• The median deposit rate expectation in the ECB’s January Survey of Monetary Analysts was 2.00% between June 2025 and Q4 2028 (the median estimate of the “long-run” rate was also 2.00%). However, risks are clearly skewed towards more easing, with the 25th percentile DFR expectation in December 2025 at 1.50%, and 75th percentile in line with the median at 2.00%.
• The 1y1y ESTR forward rate is currently 1.86% (down from 2.11% at last Wednesday’s close), underscoring market expectations for policy rates to stay below 2% throughout next year.

• Date $MM Issuer (Priced *, Launch #)
• 02/05 $5.5B #Republic of Poland $2.75B 5Y +75, $2.75B 10Y +105
• 02/05 $3B #UBS $1.5B PerpNC5.5 7%, $1.5B PerpNC10 7.125%
• 02/05 $2.5B #IDA 10Y SOFR+61
• 02/05 $1B *KFW 4% 2026 TAP SOFR+20
• 02/05 $Benchmark IBM 3Y +65a, 5Y +80a, 7Y +90a, 10Y +100a, 30Y +125a
• 02/05 $Benchmark PepsiCo 2Y +45a, 3Y +50a, 5Y +60a, 10Y +80a
• 02/05 $Benchmark US Bancorp 6NC5 +100a, 11NC10 +125a
• 02/05 $Benchmark Citigroup PerpNC5 7.37%a
• 02/05 $Benchmark Citadel Finance 5Y +195a
• 02/05 $Benchmark Pacific Life 5Y +80a
• 02/05 $Benchmark IFC 4.5Y SOFR+36a
• 02/05 $Benchmark Minera Mexico 7Y +175a
• 02/05 $Benchmark Republic of Turkiye 7Y 7.2%

Nikkei reporting that US President Donald Trump and Japanese Prime Minister Shigeru Ishiba will issue a joint statement at a White House summit on Friday, calling for building a "golden age" of bilateral relations. Ishiba will be the second foreign leader, after Israeli Prime Minister Benjamin Netanyahu, to visit Trump at the White House. 

• The meeting is likely to take place in the morning/afternoon as Trump has a dinner with Senate Republicans scheduled to take place at Mar-a-Lago in the evening.
• According to Nikkei, the statement will also outline "shared views on the economy, security and China" and "emphasize realizing a free and open Indo-Pacific".
• The impact of Trump's tariffs on Japan's manufacturing sector is likely to be high on the agenda, with proposed duties on Mexico weighing heavily on Japanese automakers.
• Kyodo reported this week Ishiba is expected to invite Trump to visit Japan in the second half of 2025, likely around the time South Korea hosts the APEC summit in autumn.  
• Kyodo notes Ishiba told a parliamentary committee on Monday, "We need to make necessary efforts to stabilize the Japan-U.S. alliance further," saying that the two nations have common visions such as a "free and open Indo-Pacific" and the rule of law.
• Kyodo adds: "Ishiba and Trump are expected to affirm, "that Article 5 of the bilateral security treaty applies to the Senkaku Islands, which are administered by Japan but claimed by China in the East China Sea..."