CZECHIA: Current-Account Data Eyed

Initial highlights from the Riksbank May meeting minutes. Very little to suggest any member of the Board clearly leans in favour of a June cut at this stage. Breman appears the most openly dovish, followed by Bunge. Meanwhile, Thedeen, Seim and Jansson remain in wait-and-see mode. We will review the minutes in more detail now.

• Thedeen: ”A policy rate of 2.25 per cent gives us the scope to act as necessary to reach our targets. The current assessment is somewhat in favour of our next step being a policy rate cut but this is far from certain. For the time being, we will maintain course and speed”.
• Breman: “It is probable we will see lower growth and somewhat lower inflation than in our most recent forecast. This indicates a lower policy rate at coming meetings, if this forecast holds”….” The decisive factor for the Swedish economy will not be an individual meeting, but the overall monetary policy conducted in the coming months”.
• Jansson: “My overall conclusion for Swedish inflation at present is thus that there is much to indicate that it will fall and that this may well happen faster than we assumed in the March forecast. That said, I still share the view in the draft update that the uncertainty in this assessment is very high”…” I think it is wise to now leave the policy rate unchanged and await more information to obtain a clearer picture of the outlook for economic activity and inflation”.
• Seim:  “As I pointed out at the last meeting, in the current situation a reasonable strategy is to constantly test the extent to which incoming data can be interpreted as reliable signals and act accordingly. This should not in any way be interpreted as an unwillingness to act. We will adjust the policy rate if the outlook for inflation and economic activity indicates that this is justified. The neutral interest rate level we are starting from provides us with favourable conditions to navigate the uncertain road ahead.”
• Bunge: “I consider that the real economic prospects suggest that a slightly more expansionary monetary policy is needed going forward”…” my view is that the economic outlook looks weaker than in March and that the risks have increased for lower inflation going forward than in our most recent forecast. However, in the prevailing environment, I consider it reasonable for us to continue to act gradually with a degree of caution and to try to avoid sudden shifts in monetary policy – so as not to fuel further uncertainty”.

• EUR Benchmark 5Y Fixed (May 21, 2030) MS+80 Area (we think there is a good chance of a large E1.0-1.5bln transaction size)
• Coupon: Annual, act/act ICMA
• Format: Reg S CAT1, registered, senior unsecured
• Settlement: May 21, 2025
• ISIN: XS3075496896
• Bookrunners: BNPP (B&D), GS, JPM
• Timing: May price today

Details as per Bloomberg

Yesterday’s low in gilt futures holds at the open (91.47), as the contract bases at 91.48, before recovering to ~91.65 last.

• The short-term bearish technical threat remains present, with the next support of note located at the April 15 low
• Yields 1-2bp lower across the curve, 2s10s and 5s30s curves stick within multi-week ranges.
• 2s continue to trade sub-4.00% after yesterday’s brief and limited break above.
• 10-Year yields have pierced the April 15 high (4.672%) during the past couple of sessions but haven’t meaningfully extended beyond that point.
• Fundamentals continue to point to further curve steepening, although a more activist approach from the BoE & DMO (when it comes to skewing bond sales more towards the short end) presents a risk to that view.
• Those steps from official agencies have played into the move away from April lows in long end swap spreads (along with broader macro dynamics centred on the tariff picture).
• GBP STIRs roughly in line with levels we flagged ahead of the gilt open, showing 48bp of BoE cuts through year-end, with the next 25bp step fully discounted through September.
• On the supply front, the DMO will come to market with GBP4.25bln of the 4.50% Mar-35 gilt this morning.