HUNGARY: Bubor Rates

• Euribor futures leading the way lower this morning - there's no real standout driver for the underperformance other than looking ahead and pre-positioning ahead of this week's ECB meeting. It has been outside the front two contracts that the biggest moves have been seen, however, with contracts from Mar-23 onwards down 5-7 ticks on the day.
• In contrast Eurodollar futures are within 0.5 ticks of Friday's close while SONIA futures are 0.5-1.5 ticks higher across the strip.

European Union foreign ministers meeting presently in Brussels as part of the Foreign Affairs Council. Ministers are set to approve the latest round of 'enhancements' to the sixth package of sanctions against Russia, including the implementation of a ban on the import of Russian gold. Select comments and Q&A below from EU High Representative for Foreign Affairs Josep Borrell:

• "We will discuss [...] improving the implementation of the already existing sanctions...The most important [proposal] is the ban on Russian gold, but [also] to be sure that the sanctions are effective. Because there is a big debate about “are the sanctions effective? Are the sanctions affecting us more than Russia?” Some European leaders have been saying that the sanctions were an error, were a mistake. Well, I do not think it was a mistake, it is what we had to do and we will continue doing."
• Reporter: On Ukraine, or specifically in Germany, all eyes are on Nord Stream 1 now. Is this actually a good way to impose further sanctions and to strengthen existing ones? Borrell: "...We know that Russia can use the gas as an weapon against us. And in fact, they have already been doing that, they have been decreasing the gas supply...We are not going to stop supporting Ukraine and [stop] putting the sanctions on Russia. There is a risk, certainly, there is a risk for the energy supply - everybody knows...the Commission first and after the Council will be preparing all the plans in order to be able to face any possible situation."
• Reporter: Q. How hopeful are you that there will be a deal this week in Turkey on unblocking grain exports from Ukraine? Borrell: "I think this might be the most important thing that the international community is facing...there is no food because Russia is blocking the exports of Ukrainian grains. We are doing whatever we can in order to transport these grains through other ways, through the Solidarity Lanes, through the Black Sea, through Romania, Bulgaria. But that is not enough, so I hope, and I think I have hope, that this week it will be possible to reach an agreement to de-block Odessa and other Ukrainian ports."

• Geopolitical uncertainty combined with hawkish response to US CPI print have been supporting the Dollar broadly, with DXY Index surging above the 109 level on Thursday before edging lower.
• USDKRW broke above the 1,300 level last week and has been trading at its highest level since April 2009 lately.
• We previously saw that South Korean market and economic data could be used as a good proxy of the current state of the economic activity.
• The chart below shows that an extremely weak KRW has been associated with global PMI falling significantly below the 50-line thresholds, increasing the odds of a global recession.

• Economic data showed earlier this month that momentum on South Korea exports continues to fade as China slowdown combined with the surge in recession fears globally (particularly in Europe) have been weighing on the global economic activity.
• Macro analysts have historically used South Korea exports as one of the key input when computing a global leading economic indicator.
• The chart below shows that SK exports have strongly led equities EPS by 3 months in the past two decades, therefore further deceleration in exports and global trade could continue to weigh on risky assets in the near to medium term.

Source: Bloomberg/MNI.