HUNGARY: BYD Says Hungary Plant to Start Production in 2Q-2026; NBH Minutes Due
Nov-05 08:05
- BYD’s executive vice-President said its plant in Hungary plant will start production in the second quarter of 2026. BYD plans to produce its Atto 3 and Seal U Plus DM-I models in Turkey, while it has no current plans to enter the US.
- Prime Minister Viktor Orban reiterated his opposition to Ukrainian EU membership, stating that this would mean "bringing the war to Europe and taking Hungarians' money to Ukraine." He noted that President Volodymyr Zelenskyy "once again attacked Hungary and the Hungarian government at a conference in Brussels with a variety of accusations".
- Minutes from the October NBH rate-setting meeting will be published at 13:00GMT/14:00CET. At that meeting, both rates and cautious guidance were left unchanged, as was unanimously expected.
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GILTS: Bear Steepening
Oct-06 07:59
Gilts open lower on global cues, after the JGB curve steepened as a new PM was elected and with OATs struggling as French political risks deepen.
- Futures pierce Thursday’s low, basing at 90.51.
- Bears remain in technical control at this stage, particularly with UK fiscal risks lingering. Initial support and resistance in futures still located at 90.26 & 91.28, respectively.
- Yields 2-6bp higher.
- 10s still comfortably within their recent 4.60-4.80% range, last 4.73%.
- 2s10s and 5s30s stick within their respective multi-week ranges, trading ~7bp and ~10bp below their cycle closing highs. Steepening trends intact.
- BoE-dated OIS still shows ~5bp of easing through year-end and is not discounting the next 25bp cut until the end of the April MPC.
- We continue to believe that markets underprice the odds of a Q4 rate cut.
- Comments from BoE Governor Bailey are due today.
- They will be closely scrutinised (even though he spoke as recently as Friday), particularly after Deputy Governors Ramsden & Breeden failed to push back against the idea of rate cuts last week.
- We have previously suggested that Bailey and those two Deputies would probably have to join dovish dissenters Dhingra & Taylor if we were to see a cut in Q4.
- Lower tier construction PMI data is due today.
- Elsewhere, the BoE will sell GBP775mln of short bucket gilts from its APF (3- to 7-Year).
OAT: 10-year OAT/Bund Spread Pierces December 2024 Closing High
Oct-06 07:53
The 10-year OAT/Bund spread has pierced the December 2024 closing high of 87.8bps following Lecornu’s resignation. The spread is now 7bps wider on the session.
- While the timing of Lecornu’s resignation has come as a surprise, his prospects were appearing bleak amid opposition from both sides of the political spectrum during his short (less than 1 month) tenure in office.
- President Macron is now faced with a familiar dilemma in needing to appoint another PM (or face calling a fresh legislative election). Our Political Risk team will provide more colour in due course.
- Clearly, the EC’s deadline for 2026 budget drafts (October 13th) is extremely unlikely to be met by France, further delaying hopes of needed fiscal consolidation.
EUR: EUR/USD Slips Through Horizontal Support on Lecornu Resignation
Oct-06 07:52
- EUR extends losses on the back of that resignation: EUR/USD now through earlier lows as well as the Oct02 low at 1.1683. French equities also see weakness - with the CAC40 easily the underperformer in Europe.
- Lecornu's resignation opening up more criticism from other parties: National Rally's Bardella says the government have shown they have understood "nothing" regarding the country's problems.
- Next major support in EURUSD crosses at 1.1646, the late Sept low. Weakness through here snaps the weak uptrend posted off the August 1st low.
