NATGAS: Partial Nord Stream Return Wouldn't Surprise TotalEnergies CEO

The ECB’s persistent and common component of inflation metric fell 5bp to 2.11% in January, still slightly above the 2024 average of 1.97% but broadly in line with the 2% inflation target. The data should support Governing Council dove’s confidence in the inflation outlook, even as domestic spot inflationary pressures remain evident. 

• PCCI is the ECB’s preferred measure of medium-term inflation pressures, and is constructed “by estimating a dynamic factor model that extracts the persistent and common component of inflation from granular price data at the item-country level”.
• Core PCCI (i.e. excluding energy and food) was little changed at 1.90%, while Supercore (“which picks out those items that are estimated to co-move with the business cycle”) eased a tenth to 2.7%.
• The weighted median metric saw a notable 3 tenth increase to 2.8% for its highest since May 2024. Meanwhile, the 10% and 30% trimmed mean series were each 2.5% Y/Y. 

Little net movement in GBP STIRs today.

• BoE-dated OIS still prices a little over 50bp of cuts through year-end, while SONIA futures are -1.0 to +2.5.
• No comments of note so far from the BoE’s BEAR conference.
• Vicky Saporta, Executive Director of the Markets Directorate at the Bank has noted that the Bank is closely monitoring the move higher in SONIA rates, with the SONIA overnight/bank rate spread moving sub 5bp in recent weeks.
• Previous BoE staff work (predictably) noted that "as liquidity draining progresses, banks may have to compete more for overnight funding and lenders may be able to demand a better return on their deposits, pushing rates higher and moving SONIA closer to Bank Rate."
• Comments from BoE dove Dhingra are due this evening (18:00 GMT), after she was reappointed for a second term earlier today.
• Don’t expect a change in tone as she speaks on “Bracing for turbulence:  UK inflation and prospects for monetary policy.”
• Deputy Governor Ramsden’s Friday address is likely to garner the most market interest when it comes to this week’s boE-speak, as mentioned earlier.

• Currency futures volumes picking up nicely on the back of the extension higher in the dollar - particularly evident in GBP/USD, which sees some of the best volumes of the session so far to press GBP/USD to 1.2613 lows.
• USD gains are pretty universal in recent trade, helped higher by the slippage in US stock futures and US yields after the cash equity open. The sell-off is extending at typing, showing through the Friday low of 6024.50, and narrowing the gap with 6014.00 and 6020.75 - both consequential levels.
• Trump is set to be meeting his French counterpart across several sets of meetings today, culminating in a press conference alongside Macron at 1930GMT/1430ET - at which markets will look to gauge whether the French president has been successful in getting Trump to dial-down his approach to Moscow as part of the effort to end the war in Ukraine.