BUNDS: Spiking higher in early trade

The Swedish goods trade balance was SEK6.2bln in December, down from SEK7.5bln in November. On a 12-month rolling basis, the trade balance was SEK67.5bln , up from SEK62.6bln in November and the YTD average of SEK63.6bln. However, the trend in the value of imports and exports since 2023 remains on a sluggish path, reflecting subdued demand conditions in both Sweden and its major trading partners (e.g. Germany and China). 

• Higher imports and lower exports saw the Swedish 12-month trade surplus with the US narrow a little to SEK114.1bln (vs SE116.2bln prior). Like the Eurozone, Sweden’s trade surplus with the US makes it susceptible to US protectionist policies, particularly with in areas like Autos.
• The Swedish trade deficit narrowed a little with Germany (SEK113.1bln deficit vs SEK116.6bln prior), driven by lower imports.
• The trade deficit with China widened (SEK22.1bln vs SEK20.3bln prior) on account of higher imports and lower exports, a trend which has extended since the middle of 2024.
• As of November, the volume of Swedish imports fell 1% Y/Y while exports fell 2% Y/Y. Statistics Sweden notes that “Exports of passenger cars decreased in both value and volume compared with last month and last year”.

Germany has announced the coupon of its new Mar-27 Schatz on auction tomorrow at 2.20%. E5bln of that Schatz will be on offer.

• US Tnotes is met by some decent selling above the 109.00 figure, and already some notable volumes across Core Govies on both sides of the Atlantic.
• Further upside momentum in TYH5 opens to the next resistance seen at 109.08+, and this would be followed by 109.28, not a Tech level but where the contract was trading at before the Hawkish Powell at the last FOMC meeting in December.
• In yield terms, 4.50% is at 109.10 today.