ECB: December Projections: Downward Revisions Across GDP Components
The ECB made small downward revisions to its Q/Q real GDP growth projections in December, with President Lagarde noting in the press conference that risks remain tilted to the downside. Eurosystem staff write that “the outlook for GDP growth has been revised down mainly owing to revisions to data on investment in the first half of 2024, expectations of weaker export growth in 2025, and a small downward revision to the projected expansion of domestic demand in 2026”
- Specifically, Q/Q GDP growth is expected at 0.3% Q/Q throughout 2025. The September projections had projected 0.4% Q/Q growth in Q2, Q3 and Q4.
- Private consumption is still expected to by the main driver of GDP growth, but it “has also been revised down for 2025-26, on account of a reassessment of the speed at which the saving ratio is expected to normalise from its current elevated levels”. The ECB note once again that "the overall resilient labour market and an assumed gradual recovery in consumer confidence should also support private consumption growth". The unemployment rate projection was revised lower through the forecast horizon.
- There was also a downward revision to sequential investment and government consumption growth: “Although surrounded by high uncertainty, fiscal policies are assumed to be on a consolidation path overall”.
- Trade policy also adds a source of uncertainty to the projections. As noted by President Lagarde in the press conference: “Under the baseline assumption that the trade policies of Europe’s key trading partners remain unchanged”.
- A reminder that annual GDP projections from 2024 to 2027 came in below analyst expectations heading into the decision.
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OPTIONS: Expiries for Nov13 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.0600-05(E1.8bln), $1.0625-30(E1.1bln), $1.0650(E1.2bln), $1.0700-20(E1.2bln), $1.1000-16(E2.0bln)
- USD/JPY: Y153.00($740mln), Y155.40-50($703mln)
- EUR/GBP: Gbp0.8300-05(E892mln)
- AUD/USD: $0.6525-40(A$502mln)
- USD/CNY: Cny7.1000($1.0bln), Cny7.2000($931mln)
US TSY FUTURES: Early Dec'24-Mar'25 Roll Update: FV Leads Volume
Tsy quarterly futures roll from Dec'24 to Mar'24 is underway. Volumes picking up this morning while percentage complete is still less than 2% across the curve ahead the "First Notice" date on November 29. Current roll details:
- TUZ4/TUH5 appr 9,300 from -7.25 to -6.5, -6.62 last
- FVZ4/FVH5 appr 46,200 from -7.25 to -6.75, -6.75 last
- TYZ4/TYH5 appr 14,600 from -5.25 to -4.5, -4.7 last
- UXZU4/UXYH5 less than 200 from -9.25 to -8.75, -8.75 last
- USZ4/USH5 6,400 from -6.5 to -5.0, -5.75 last
- WNZ4/WNH5 less than 100 from -2.75 to -2.5, -2.5 last
- Reminder, December futures won't expire until next month: 10s, 30s and Ultras on December 19, 2s and 5s on December 22. December options expire November 22.
US: Probability Of Senator Rick Scott Winning Senate Leadership Recedes
Senate Republicans will hold an internal, closed ballot, election for their leadership tomorrow. The race to replace the outgoing Minority Leader Mitch McConnell (R-KY) has transformed into a proxy struggle between Senate orthodoxy represented by Senate Majority Whip John Thune (R-SD) and Senator John Cornyn (R-TX) and the Trump-aligned media ecosystem, represented by Senator Rick Scott (R-FL).
- NBC notes: “The battle will gauge the staying power of long-serving senior Republicans grounded in an institutionalist view of the Senate... against an emboldened pro-Trump wing looking to smash any vestiges of the old GOP...”
- Public endorsements from prominent Republicans like Elon Musk and Tucker Carlson fired Scott into poll position on prediction markets temporarily. But that buzz has since receded, with Thune now given a 63% implied probability of winning on Polymarket.
- Trump has declined to endorse a candidate, with strategists noting that Trump’s direct involvement could compel the traditionally independent chamber to reject Scott. Trump’s only official demand is that the next Majority Leader support “recess appointments.” The move would allow Trump to bypass Senate scrutiny for executive branch confirmations and may turn off some institutionally minded Republican senators.
- Scott said in an interview: “My pitch is pretty simple. I’m a business guy who gets things done, and I’m completely on board with Donald Trump’s agenda. It’s as simple as that… As a conference, not me, but as a conference, we will be very clear about what we’ll accomplish. It will be identical to the Trump agenda.”
