CREDIT RATING: Orsted: Fitch Outlook Negative

• Newsflow and price action is understandably muted, with market volumes well below average for this time of day given the proximity to the Christmas market closures that kick in in earnest tomorrow. That said, EUR is softer on the session, with continued focus on French politics. The French PM is set to unveil a new cabinet later today - a slightly later timeline than initially expected - which may be weighing on French bonds and, in turn, the single currency.
• Having traded 0.8315 overnight, EUR/GBP is back to negative on the day - having reversed ahead of any test on the 50-dma at 0.8319 - a level markets have failed to break on three occasions in the past week or so.
• EUR/NOK is lower for a second session, extending the reversal off the post-Norges Bank high to just over 1%. Rate is now meeting support at the confluence of the 50-, 100-dmas of 11.7666/65. The greenback is more mixed. The USD Index is very mildly higher, but is holding the majority of Friday's slippage - leaving 108.541 the key level ahead.
• As a gauge of lighter volumes and limited liquidity today: EUR futures have traded volumes ~20% below average for this time of day, GBP ~50% lower and JPY ~40% lower. Tariff headlines failed to ignite significant market moves, despite reports that the US have triggered investigations into the legacy semiconductors industry that could result in steeper tariffs on Chinese goods once Trump is in office.
• Building permits data is unlikely to move the needle, however prelim durable goods data is also set for release, as well as the December consumer confidence report. There are no central bank speakers of note. 

• The Bank of England’s MPC voted to keep Bank Rate on hold at 4.75% on Thursday with the guidance largely unchanged.
• However, there was a surprise in the vote split with both Ramsden and Taylor joining Dhingra in voting for an immediate 25bp cut.
• The MPC were largely dismissive of higher wage growth and continue to look for "gradual" cuts.
• We don't think the extra dissenters now change the course for the BOE; we expect they would have looked for sequential cuts early in 2025 anyway.

See the full MNI BOE Review here.

Core global FI markets away from session lows, seemingly driven by some weakness in crude oil and bears failing to push 10-Year Bund yields meaningfully above month-to-date highs.

• Depleted liquidity into the Christmas break also a likely factor when it comes to the scale of move on limited headline drivers.
• Benchmark U.S., German & UK yields all still higher on the day, with UK spreads wider across the curve.