RUSSIA: Russia’s Shoigu Arrives in Beijing to Meet Xi Jinping
Feb-28 08:29
- The Secretary of Russia's Security Council, Sergei Shoigu, has arrived in Beijing to meet Chinese President Xi Jinping and Foreign Minister Wang Yi, state news agency RIA Novosti reported. The sides plan to “discuss bilateral security, international and regional issues” in what will be Shoigu’s second visit to China in the last 3 months.
- The Russian Federation Council's Economic Policy Committee has proposed conditions for the return of foreign automakers to Russia, Vedomosti report. They are largely aimed at securing guarantees that production in Russia will be preserved even if foreign companies leave again, while senators believe they should only be allowed to work as part of joint ventures with Russian automakers, with the Russian side retaining control.
- Bank regulation in 2025 will be aimed at restoring capital reserves, which shrank last year due to the rapid growth of lending, CBR chief Elvira Nabiullina said yesterday as per Kommersant.
- There are no major data releases scheduled for today.
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GILTS: Firmer Alongside Peers
Jan-29 08:28
Gilts catch up to the rally in U.S. Tsys that followed yesterday’s well-received 7-Year auction.
- Futures trade as high as 92.45.
- Short-term bullish correction within the longer run bearish technical theme remains intact.
- Initial support and resistance 91.10/92. 68.
- Yields 2.5-3.5bp lower, 10s lead the rally.
- Spread to Bunds continues to hover around 204bp, which represents the early November closing low. A break (on a closing basis) would expose the psychological 200bp marker.
- GBP STIRs roughly in line with levels we flagged earlier. SONIA futures flat to +4.0, BoE-dated OIS showing ~71bp of cuts through year-end.
- Comments from UK Chancellor Reeves due from just after 10:00 London. We provided greater colour in an earlier bullet. It is unlikely to be a market moving speech based on the already-released excerpts.
- As a result, macro and cross-market cues will be eyed today, with the UK data calendar subdued through the end of the week.
- Supply-wise, the DMO will come to market with 3.0bln of the 0875% Jul-33 green gilt this morning.
SPAIN DATA: Q4 Flash GDP Firmer Than Consensus
Jan-29 08:24
Spain Q4 flash GDP was stronger than consensus at 0.8% Q/Q (vs 0.6% consensus, 0.8% prior) and 3.5% Y/Y (vs 3.2% consensus, 3.5% revised prior from 3.3%). Spanish outperformance versus other key Eurozone countries has been highlighted in survey evidence, with the December composite PMI the highest since March 2023.
- Growth continued to be driven by domestic demand, which contributed 1.2pp to the Q/Q print (vs 1.0pp in Q3). External demand contributed negatively 0.4pp.
- Household consumption grew 1.0%Q/Q while gross fixed capital formation was very strong, increasing 3.4%Q/Q and more than offsetting the 1.4%Q/Q fall seen in Q3. Within this, tangible fixed assets (ex-housing and ex-construction) grew 7.6%Q/Q.
- Export growth was 0.1% Q/Q (vs 0.4% in Q3), whilst imports grew 1.3% Q/Q (vs 0.9% in Q3).
- Gross valued added was positive in all major sectors (industrial, construction and services), but negative in the primary sector.
EGBS: Spreads To Bunds Tighten On ASML-led Equity Rally
Jan-29 08:16
10-year EGB spreads to Bunds are generally biased tighter, driven by this morning’s ASML-led rally in European equities.
- The 10-year BTP/Bund spread has fully retraced the widening seen into yesterday’s close, now 2bps tighter at ~107.5bps. Yesterday’s widening came on news that PM Meloni has been placed under investigation in a case relating to the repatriation of a Libyan police officer.
- OAT/Bund has also tightened ~0.5bps to ~72.5bps, despite reports of a fresh rift between the Socialists and the Government following comments from PM Bayrou on migration. A deterioration of relations between the groups may threaten the chances of Bayrou getting his 2025 budget through the National Assembly.
- Spanish flash Q4 GDP was stronger-than-expected at 0.8% Q/Q (vs 0.6% cons, 0.8% prior), but did not generate any material outperformance in the Spanish curve relative to peers.
