SWEDEN: Borrowing Report Preview: Substantial Increase In SGB Issuance Expected
The Swedish National Debt Office (NDO) will release its November borrowing report on Thursday at 0830GMT/0930CET. This will be the first report to incorporate the Government’s expansionary 2026 budget. Expectations are for a substantial increase in nominal SGB issuance next year relative to the May report, with an increase in foreign currency issuance also expected.
- Since the May report was published, the NDO’s budget balance forecast error has been quite small (SEK2.8bln as of October). As such, fiscal policies are the primary driver of issuance plan revisions.
- In the May report, the NDO estimated the 2026 budget deficit at SEK89bln, with nominal SGB issuance seen at SEK146bln and foreign currency issuance expected at SEK19bln.
- Analyst estimates we have seen look for an increase in the 2026 budget deficit to SEK150-165bln. The larger deficit is expected to be financed by SEK175-190bln of nominal SGB issuance. Consensus also expects an increase in the foreign currency issuance pool to ~SEK40bln (i.e. issuing two foreign currency bonds next year instead of one).
- For 2027, there are a wider range of budget deficit expectations from SEK135-170bln. Nominal SGB issuance for 2027 is expected to be similar to 2026.
- Analysts expect nominal SGB auction sizes to increase to SEK7-8bln from next year. That’s up from just SEK3bln at the start of 2024. The smaller SEK7bln size may be chosen if the NDO decides to hold two nominal SGB syndications next year, versus the one currently signposted for Q1 2026.
- The NDO currently concentrates issuance in the 2-, 5- and 10-year segments of the curve. We will be interested to see if there is appetite to issue at longer tenors to build up long-end liquidity, though caveat that structural global steepening pressures be a deterrent to such a move.
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FED: MNI Fed Preview - October 2025: QT, Or Not QT
MNI's preview of the October FOMC has been published - Download Full Report Here
- The Federal Reserve is overwhelmingly expected to cut the funds rate by 25bp for a 2nd consecutive meeting on October 29, bringing the target range to 3.75-4.00%.
- This will again be framed as a risk management cut, with the limited data available since the September meeting not disconfirming that the shift in the balance of risks had tilted toward labor market downside.
- Dissent to this decision should once again be limited to Gov Miran in favor of a 50bp cut.
- With limited new developments and official data to opine on, Chair Powell’s press conference will be eyed for affirmation that a December cut remains on track, as signalled by the most recent Dot Plot.
- He’s unlikely to give much away, but it would be surprise given the lack of data and relevant developments if he suggested that a further 2025 cut was in any greater doubt than it was 6 weeks earlier.
- Instead, we think focus in terms of action at this meeting will be on the balance sheet, with the Fed likely to announce an end to quantitative tightening amid diminishing reserve levels and nascent evidence of funding market pressures.
- We will also be watching for any news on the Fed’s communications framework, with an updated “Dot Plot” potentially unveiled at some point by year-end.
MNI’s separate preview of sell-side analyst summaries to follow on Monday Oct 27
RATINGS: Moody's Lowers France's Outlook To Negative, Maintains Aa3 Rating
Moody's has lowered its outlook on France to negative from stable.
- Moody's was expected to at least lower the outlook, so this is not a surprise - there had been some risks perceived of a downgrade to A1 (from Aa3) in the domestic and foreign currency long-term issuer and domestic-currency senior unsecured ratings.
- Per the Moody's release: "The decision to change the outlook to negative reflects the increased risk that the fragmentation of the country's political landscape will continue to impair the functioning of France's legislative institutions. This political instability risks hampering the government's ability to address key policy challenges such as an elevated fiscal deficit, rising debt burden, and durable increase in borrowing costs, thus leading to a more rapid weakening in France's key fiscal metrics than we currently expect."
- Both S&P and Fitch have already downgraded France’s sovereign rating to the single-A bucket this year.
USDCAD TECHS: Corrective Pullback
- RES 4: 1.4200 Round number resistance
- RES 3: 1.4167 50.0% retracement of the Feb 3 - Jun 16 bear leg
- RES 2: 1.4111 High Apr 10
- RES 1: 1.4080 High Oct 16 and the bull trigger
- PRICE: 1.4016 @ 16:33 BST Oct 24
- SUP 1: 1.3979/3907 20- and 50-day EMA values
- SUP 2: 1.3829 Bull channel base drawn from the Jul 23 low
- SUP 3: 1.3769 Low Sep 19
- SUP 4: 1.3727 Low Aug 29 and a bear trigger
USDCAD has pulled back from its recent highs. The trend condition is bullish and a move lower is considered corrective. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4111, the Apr 10 high, and further out, scope is seen for an extension towards 1.4167, a Fibonacci retracement. First key support lies at 1.3907, the 50-day EMA. Support at the 20-day EMA lies at 1.3979.
