HUNGARY: Dec Inflation Report a More Significant Risk Event After NBH Minutes
Dec-03 13:43
- The NBH minutes are rarely a market mover as they tend to repeat guidance from the policy statements/post-decision press conferences. However, this month’s edition offered one particularly interesting line – “The Council was in agreement that the projection in the December issue of the Inflation Report was going to be crucial from the perspective of next year’s monetary policy stance”.
- Although it adds that “tight monetary policy had to be contained”, associating the stance of monetary policy for 2026 with the December Inflation Report could set the stage for a notable dovish shift in tone from the central bank before year-end, and could be contributing to the latest move for EURHUF to new session highs.
- While this is still unlikely to translate into a rate cut before the Spring 2026 elections – particularly given the uncertainty posed by the government’s profit cap measures – the evolution of NBH communication will certainly be worth watching. The central bank meet next on December 16 – and the policy statement will include the key highlights from the quarterly Inflation Report.
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US TSYS/OVERNIGHT REPO: Month-End Secured Rates Soar, To Subside But Not Fully
Nov-03 13:39
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
PIPELINE: Corporate Bond Update: Novartis Capital 7Pt Adding Pressure to Tsys
Nov-03 13:34
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)
EURIBOR OPTIONS: Put Condor buyer
Nov-03 13:29
0RH6 97.87/97.75/97.68/97.56p condor, bought for 2.5 in 4k.
