NORGES BANK: Bache's Comments On Rates All In Line with June MPR Rate Path
Initial comments from Bache at Norges Bank's press conference should all be viewed within the context of the June MPR rate path.
From the Governor's opening remarks published on the website: "The June forecast indicates a decline in the policy rate to about 3 percent in 2028. As such, we do not envisage a large decline in the policy rate, and we do not foresee a decrease in interest rates back to the levels seen in the decade prior to the pandemic".
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BONDS: Most Of Rally Holds, Curves Flatter
Still no clear driver for the extension of rally in bonds, that was seemingly led by EGBs.
- Major core global FI curves flatten.
- The previously covered FV/US block flattener will have aided the direction of travel, but the fact that the move was EGB-driven negates that as a primary driver.
- Bearish technical themes intact across the major futures contracts.
EU-RUSSIA: Foreign Ministers Look To Sign-Off On 18th Sanctions Package
Foreign ministers from across the EU are meeting in Brussels as they aim to sign off on the 18th package of sanctions against Russia, which is set to include a lower dynamic oil price cap. The process has been held up for some time due to objections from Slovakia. Bratislava's objections have not specifically been about this sanctions package, but regarding the EU's efforts to impose a phase-out of all Russian hydrocarbons.
- The Slovakian gov't argues the phase-out poses threats to its energy security, but it can be approved against Slovakia's wishes, given that it only requires a qualified majority. The sanctions package on the other hand requires unanimity, with the gov't of PM Robert Fico effectively holding the sanctions 'hostage' until a compromise is reached on the phase out.
- Over the weekend, Fico claimed that his gov't would look to have a deal done by today's foreign ministers' meeting, saying “We want to resolve this by Tuesday because tensions are rising on all sides," while hinting at compromise when adding "We need to win something in this fight, though it will not be a 100-0 result...We want political commitments, guarantees from partners and the Commission that this problem will not remain only on Slovakia's back."
- Politico reports that a holdup by Malta at last week's Coreper II meeting has been dealt with and should not prove an obstacle to the package being agreed to today.
- EU High Commissioner for Foreign Affairs and Security Policy Kaja Kallas will deliver a post-meeting presser at ~16:45CET (10:45ET, 15:45BST).
SONIA OPTIONS: SFIZ5 96.25/96.05/95.85 Put Fly Lifted
SFIZ5 96.25/96.05/95.85 put fly paper paid 3.25 on 5.5K. Was also lifted on 5.5K yesterday.
