EURJPY TECHS: Corrective Cycle

• MNI: UK JAN CPI -0.1% M/M, +3% Y/Y
• UK JAN CORE CPI -0.4% M/M, +3.7% Y/Y
• UK JAN RPI -0.1% M/M, +3.6% Y/Y
• UK JAN SERVICES CPI -0.2% M/M, +5% Y/Y

• The Bank of England forecast headline CPI at 2.82%Y/Y (with both the MNI median and Bloomberg consensus at 2.8%). Most analysts are within a 2.7-2.9%Y/Y range. This would be the highest print since March 2024.
• The closely watched services CPI is expected by the BOE to increase to 5.16%Y/Y (MNI Median and Bloomberg consensus are a little lower than this at 5.1%). This would be a notable increase from the low 4.37% print of December (but note that both the October and November prints were both above 5.0%).
• The reversal of the timing-induced very low December air fares print is the main expected contributor to the increase in both headline and services CPI, with VAT on private school fees and a 50% increase in bus fares (from £2 to £3) also contributing to both headline and services CPI.
• In addition with this being January data, new utilities prices will be included (these update quarterly and will contribute negatively) but fuel is the other component expected to add to headline CPI – so the overall impact of energy on headline CPI is likely to be muted.
• The other focus will be on the new weights – which remember come as A and B weights (with A weights in January and B weights for February through December) for the UK.

Slovakia has announced a mandate for a syndication while Germany, Spain and France are all still due to hold auctions this week and Italy is due to launch its inaugural retail BTP Piu. Already this week, the ESM held a syndication whilst Slovakia and Finland held auctions. We look for estimated gross issuance for the week of E37.4bln (excluding the retail operation), down from E50.9bln last week.

For the full document including more details on issuance this week and next week click here.

• Slovakia is likely to hold a syndication today after it announced a mandate for a new 15-year SlovGB maturing 27 February 2040 to take place in the “near future”. We pencil in a transaction size of E2.5-3.5bln.
  • The maturity is a little shorter than we had expected, we had looked for a new 12-year 2037 SlovGB to launch via syndication in February.
• This morning, Germany will return to the market to sell E4.5bln of the 10-year 2.50% Feb-35 Bund (ISIN: DE000BU2Z049).
• Tomorrow, Spain will hold a Bono/Obli auction. On offer will be a combined E4.5-5.5bln of the on-the-run 2.40% May-28 Bono (ISIN: ES0000012O59) and the 2.70% Jan-30 Bono (ISIN: ES0000012O00) alongside the 3.55% Oct-33 Obli (ISIN: ES0000012L78).
• Also tomorrow, France will hold a MT OAT auction selling a combined E11.5-13.5bln. The new 3-year 2.40% Sep-28 OAT (ISIN: FR001400XLW2), the 0% Nov-29 OAT (ISIN: FR0013451507) and the on-the-run 5-year 2.75% Feb-30 OAT (ISIN: FR001400PM68) will be on offer.
• Later tomorrow, France will return to hold a IL OAT auction to issue a combined E1.50-2.25bln. The 0.10% Jul-31 OATei (ISIN: FR0014001N38). The 0.10% Jul-36 OATei (ISIN: FR0013327491), the 0.95% Jul-43 OATei (ISIN: FR001400QCA1) and the 0.10% Mar-32 OATi (ISIN: FR0014003N51) will be on offer.