FRANCE: Bayrou Govt Survives No Confidence Vote, Clears Path For 2025 Budget
Feb-05 17:41
The government of French Prime Minister Francois Bayrou has survived a 'no confidence' vote, clearing the path for the government to adopt a 2025 budget.
- The vote is in line with expectation, as MNI noted in an earlier bullet: FRANCE: Bayrou Gov't Safe In Today's Votes; Gov't Expects Budget Adopted Mid-Feb
- France24 noted ahead of the vote that although the National Assembly, Socialists, and National Rally declined to back the no-confidence motion, "it is unlikely to be the only challenge to [Bayrou's] shaky administration in the coming months."
- RN leader Jordan Bardella said that although, "it's a bad budget... we need a budget... We need to avoid uncertainty because many of our fellow citizens... are extremely worried about possible long-term instability."
- Socialist leader Olivier Faure said toppling the government over the budget would only have resulted in France having "a prime minister further to the right," adding: "We chose to give France a budget."
- Bloomberg notes: "Bayrou has now largely completed his two most pressing missions: adopting a budget and breaking the unity of the leftist New Popular Front alliance," but, "will still likely struggle to adopt new legislation in the coming months given the fragmented parliament and the diminished power of Macron’s coalition."
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
STIR: ECB Terminal Rates Highest Since US Election Ahead Of EZ CPI
Jan-06 17:39
- Eurozone rates have been clear underperformers today, with 3mth Euribor futures currently up to 4 ticks lower in mid-2026 contracts vs much more modest changes for UK and US counterparts.
- Stronger than expected initial releases for German CPI have played a large role (national 2.6% vs cons 2.4 after 2.2%, HICP 2.9% vs cons 2.6 after 2.4%). Final Eurozone PMIs for December also saw upward revisions and firmer price pressures including a notable uptick in input costs for service providers.
- ECB-dated ESTR OIS prices 24.5bp of cuts for the Jan 30 decision before a cumulative 102bp of cuts for 2025 having pared the earlier shift to less than 100bp of cuts.
- Back to Euribor pricing, the implied terminal yield of 2.05% seen for the Dec’25 contract (+4bp on the day) marks the highest expected terminal rate since the US presidential election on Nov 5.
- Tomorrow sees preliminary December CPI inflation for the Eurozone and various individual countries plus ECB inflation expectations. ECB speak is slow to resume for the new year though, with Villeroy next up on Tuesday afternoon.
US TSYS/SUPPLY: Preview 3Y Note Auction
Jan-06 17:23
Tsy futures are trading near learly morning highs ahead of the $58B 3Y note auction (91282CMF5) at 1300ET, WI is currently at 4.321%, 20.4bp cheap to last month's auction.
- December auction recap: Treasury futures remained weaker, near lows after nearly in-line $58B 3Y note auction (91282CMB4) drew 4.117% high yield vs. 4.115% WI; 2.58x bid-to-cover vs. 2.60x prior.
- Peripheral stats saw indirect take-up recede to 64.18% vs. 70.62% prior; direct bidder take-up rebounds off prior low of 9.62% to 20.71%; primary dealer take-up recedes to 15.11% vs. 19.75% prior.
- Timing today's 3Y note sale: results will be available shortly after the competitive auctions closes at 1300ET.
EUROPEAN INFLATION: Bundesbank Estimates Firmer Sequential German Services CPI
Jan-06 17:17
The Bundesbank’s estimate of seasonally-adjusted German CPI suggests sequential core and services inflation accelerated in December. Respective mid-term momentum measures were mixed and did not see a major shift this month, however. The December data overall points towards some inflation stickiness at an elevated level.
- Overall core inflation accelerated to 0.26% M/M SA (0.17% in Nov, 3.1% annualized) on a seasonally adjusted basis per Buba, as services inflation accelerated to 0.26% M/M (0.09% in Nov, 3.2% annualized). Even so, the rate of sequential services CPI remained below its 2024 average of 0.34%.
- Manufactured goods ex-energy inflation meanwhile remained broadly unchanged, at 0.25% M/M (vs 0.26% in Nov, 3.1% annualized).
- 3M/3M measures were mixed: core 0.78% (0.75% prior), services 0.73% (0.79% prior), and manufactured goods ex-energy was 0.88% (0.71% prior).
