POWER: 600MW Swepol Power Link Curtailed for Works Over 4-21 September

Sovereign rating reviews of note from after hours on Friday include:

• Scope Ratings affirmed Finland at AA+, Outlook changed to Negative
• Scope Ratings affirmed Norway at AAA; Outlook Stable
• Scope Ratings affirmed South Africa at BB; Outlook Stable

Swiss July CPI is scheduled to be published today at 0730BST/0830CEST, with consensus for an unchanged 0.1% Y/Y (-0.2% M/M).

• An inline print would mean Swiss inflation starts off Q3 in line with the SNB's latest conditional inflation forecast for this quarter, and would also represent the second consecutive month of the Y/Y measure coming in within the SNB's target range again (after having missed to the downside in May for the first time since March 2021).
• Potential continued CPI prints above 0% Y/Y would likely see markets further paring the odds of SNB easing its policy rate into negative territory against the background of Chairman Schlegel's rhetoric at the June press conference ("high bar to negative rates").
• Focus should also be on services- and domestic inflation measures, which appear to be a key input in the SNB's assessment of medium-term inflationary pressures. The measures continued to print positive throughout recent months but do both sit close to multi-year lows (at 1.12% and 0.69%, respectively, in June).

Consensus to today's print is downwardly skewed, with 6 estimates for the median 0.1% Y/Y, three analysts looking for 0.0%, and one analyst seeing -0.2%.

• UBS sees 0.1% Y/Y, commenting "we expect our definition of core inflation (headline excluding energy and food) to remain unchanged at 0.6% y/y. While energy inflation is expected to rise by 0.5pp to -7.9% y/y, its positive contribution is likely to be offset by lower food (-0.5pp to -0.5% y/y) and alcohol inflation (-0.7pp to 1.1% y/y). Overall, we think the risks to our forecast are balanced. However, as we have previously flagged, the FX pass-through from a stronger CHF so far has been surprisingly weak, implying some uncertainty for the inflation trajectory over the coming months."

Latest block trade lodged at 06:51:06 London/01:51:06 NY:

• TUU5 4,017 lots blocked at 103-30.125
• UXYU5 1,750 lots blocked at 114-02.
• Price actions on the curve points to a TU/UXY steepener, note both legs were lodged through the offer.
• DV01 ~$150K.