HUNGARY: Dec Inflation Report a More Significant Risk Event After NBH Minutes

Funding market rates saw their biggest jump vs Fed administered rates since 2020 on Friday with an 18bp rise in SOFR to 4.22%, well above the Fed's administered rates including the Standing Repo Facility minimum bid rate of 4.00% (takeup in SRF jumped to over $50B Friday, with a similar amount of takeup in the Fed's overnight reverse repo facility).

• SOFR minus IORB (which is 3.90%) jumped from 14bp to 32bp; TGCR minus IORB (arguably watched more closely by some Fed officials) was better behaved but went from 9bp to 25bp. These are bigger increases than most/everyone had expected (we thought SOFR could print somewhere closer to 4.10%).
• This was of course in large part due to month-end pressures as well as $58.3B of net Treasury coupon auction settlements, and we should also mention the Treasury's cash pile rising above $1T which is reserve-draining.
• Secured rates will fall back this week now that month-end is over but SOFR may remain above IORB, with SRF takeup this morning coming in at $15B suggestive of continued market tightness.
• The Fed's end to QT is effective Dec 1, and while they won't be particularly panicked by the month-end surge, we again wonder whether the FOMC will second-guess not announcing that it would conduct temporary open market operations around month-end as some had speculated. 

REPO REFERENCE RATES (rate, change from prev. day, volume):
* Secured Overnight Financing Rate (SOFR): 4.22%, 0.18%, $3211B
* Broad General Collateral Rate (BGCR): 4.15%, 0.16%, $1153B
* Tri-Party General Collateral Rate (TGCR): 4.15%, 0.16%, $1117B
 

Adding Novartis 7Pt issuance with prior for comparison:

• Date $MM Issuer (Priced *, Launch #)
• 11/03 $Benchmark Alphabet 8-pt jumbo**: 3Y +60a, 3Y SOFR, +5Y +70a, 7Y +80a, 10Y +90a, 20Y +100a, 30Y +110a, 50Y +135a (massive debt issuance includes $6.5B over 6 tranches: 3Y, 6Y, 7Y, 13Y, 19Y and 39Y).
  11/03 $1B Neptune Bidco 5.5NC2
• 11/03 $Benchmark Novartis Capital 7Pt**: 3Y +55a, 3Y SOFR, 5Y +70a, 7Y +75a, 10Y +80a, 20Y +80a, 30Y +90a
• 11/03 $Benchmark UBS 8NC7 +120a, 21.5NC20.5 +115a
• 11/03 $Benchmark Peoples Republic of China 3Y, 5Y
• 11/03 $Benchmark Qatar 3Y +45a, 10Y Sukuk +55a
• 11/03 $Benchmark Kingdom of Jordan 7Y investor calls
• **Piror Alphabet issuance for comparison: $5B on April 28 of this year ($750M 5Y +32, $1.25B 10Y +47, $1.5B 30Y +62, $1.5B 40Y +70) a long stretch since issuing $10B on Aug 3 2020 ($1B 5Y +25, $1B 7Y +45, $2.25B 10Y +58, $1.25B 20Y +73, $2.5B 30Y +88 and $2B 40Y +108)
• **Prior Novartis issuance for comparison: $3.7B on September 16, 2024 ($1B 5Y +45, $850M 7Y +57, $1.1B 10Y +67, $750M 30Y +77)

0RH6 97.87/97.75/97.68/97.56p condor, bought for 2.5 in 4k.