EM ASIA CREDIT: China Real Estate: Vanke Yuan bond trading halt.
China Real Estate: VNKRLE (B2/B/B) "*VANKE'S 3.9% YUAN BOND HALTED TRADING AFTER 20% PRICE DROP" - BBG
Vanke $ bonds below also lower, we may see contagion in other China real estate companies (e.g. Longfor), though for now looks isolated to Vanke. Vanke has been in the press recently, pledging to do what it can to repay maturing bonds.
As of the time of writing, $ bond moves below:
VNKRLE 3.15 05/12/25 Corp - down 9pts
VNKRLE 3.975 11/09/27 Corp - down 5pts
VNKRLE 3 ½ 11/12/29 Corp - down 4pts
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STIR: SONIA Markets Around Late Friday Levels, ~75bp Of '25 BoE Cuts Priced
SONIA markets little changed, with the recovery in the long end of core global FI markets unconvincing at this stage.
- Futures hover at/around late Friday lows, last flat to -3.0.
- BoE-dated OIS also little changed, showing essentially 0 odds of a movement in rates later this week, followed by 20bp of cuts through February, 27.5bp of easing through March and 76bp of cuts through ’25.
- December '25 pricing hasn't been able to push through 3.5x 25bp cuts (88.75bp) in recent weeks, given the BoE's preference for gradual easing and the still sticky inflation backdrop.
- Labour market (Tuesday) and CPI (Wednesday) data will provide the major domestic inputs ahead of this week's BoE decision.
- Today’s flash PMI data could also impact the short end.
- We still look for BoE cuts in February & May.
- To us, the most realistic dovish outcome at this week’s meeting would probably be 3 dovish dissents voting for a cut (with rates remaining unchanged), although there may be as little as one dovish dissenter (Dhingra). More on that and the tier 1 data to come in our usual run of previews.
- Goldman Sachs recommend closing SFIZ4/Z5 flatteners for profit and moving to an outright long in SFIZ5
- They believe that the case for steady BoE cuts is becoming clearer, pointing to last week’s GDP & manufacturing data.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Dec-24 | 4.695 | -0.5 |
Feb-25 | 4.502 | -19.8 |
Mar-25 | 4.426 | -27.4 |
May-25 | 4.261 | -43.9 |
Jun-25 | 4.179 | -52.1 |
Aug-25 | 4.057 | -64.3 |
Sep-25 | 4.034 | -66.6 |
Nov-25 | 3.967 | -73.3 |
Dec-25 | 3.939 | -76.1 |
STIR: 117.5bps of Easing Priced Through End '25; Flash PMIs Headline Today
ECB-dated OIS price ~116bps of easing through the end of next year, corresponding to a deposit rate of just over 1.8%. That’s over 10bp more hawkish than before the ECB’s December decision, where rates were cut by 25bps and the bank’s pledge to keep policy “sufficiently restrictive” was removed.
- OIS markets more than fully price 25bp cuts at the January and March ECB gatherings, with 100bps of easing priced through June 2025. Meanwhile, Euribor futures are flat to -2.0 ticks through the blues today.
- Over the weekend, the hawkish Holzmann suggested rates to stimulate the economy would not be the right approach. He noted on Friday that neutral rates are “around 2%”.
- Kazaks also expressed caution with the idea of taking rates below neutral (in his view, “closer to 2% than to 3%”), but remains open to the idea of discussing larger (than 25bp) reductions.
- ECB President Lagarde speaks at a conference on “Annual Economics Conference: Pillars of Resilience Amid Global Geopolitical Shifts” today. Her keynote speech is scheduled for 0815GMT/0915CET.
- The December flash PMIs are also due today, with French data due at 0815GMT, followed by German (0830GMT) and Eurozone-wide (0900GMT) prints.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Cut-adjusted Effective ESTR Rate (bp) |
| Jan-25 | 2.631 | -28.6 |
| Mar-25 | 2.321 | -59.6 |
| Apr-25 | 2.085 | -83.2 |
| Jun-25 | 1.922 | -99.5 |
| Jul-25 | 1.844 | -107.4 |
| Sep-25 | 1.793 | -112.4 |
| Oct-25 | 1.773 | -114.4 |
| Dec-25 | 1.757 | -116.1 |
| Source: MNI/Bloomberg. | ||
EQUITY TECHS: E-MINI S&P: (H5) Bullish Trend Structure
- RES 4: 6184.00 1.236 proj of the Aug 5 - Sep 3 - 9 price swing
- RES 3: 6200.00 Round number resistance
- RES 2: 6194.19 1.236 proj of the Aug 5 - Sep 3 - 9 price swing
- RES 1: 6178.75 High Dec 6 and the bull trigger
- PRICE: 6129.75 @ 07:21 GMT Dec 16
- SUP 1: 6097.76 20-day EMA
- SUP 2: 6043.00/6004.31 Low Nov 26 / 50-day EMA
- SUP 3: 5970.25 Low Nov 21
- SUP 4: 5921.00 Low Nov 19
The S&P E-Minis contract remains bullish and the latest shallow pullback is considered corrective. Recent gains confirm a resumption of the uptrend and signal scope for a continuation near-term. Note that moving average studies are in a bull-mode set-up, highlighting a dominant uptrend and positive market sentiment. A resumption of the trend would open 6145.26, a Fibonacci projection. Initial support to watch lies at 6097.76 the 20-day EMA.
