EMISSIONS: Denmark Already Reached 2025 Climate Target
May-01 12:18
Denmark has already achieved its 2025 climate target to reduce emissions by 50% vs 1990 levels, Denmark’s Ministry of Climate and Energy said, cited by Reuters.
- The ministry further said that Denmark could meet its 2030 climate targets which stipulates a 70% reduction in emissions vs 1990 levels, driven by electric vehicles and the decarbonisation of the agricultural sector.
- Denmark is further targeting climate neutrality by 2050.
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PIPELINE: Corporate Bond Roudup: $1B DBJ 5Y SOFR Launched
Apr-01 12:16
- Date $MM Issuer (Priced *, Launch #)
- 04/01 $1B #DBJ 5Y SOFR+59
- 04/01 $500M Kommunalbanken Norway 4Y SOFR+41a
- 04/01 $Benchmark NRW Bank 5Y SOFR+49a
- 04/01 $Benchmark LPL Holdings 3Y, 5Y, 10Y
TARIFFS: OBR Scenario Analysis on Impact of US Goods Tariffs on the UK
Apr-01 12:12
- The OBR notes that UK trade as a share of GDP is around 64%, above the G20 average of 55 per cent% - illustrating that the UK economy is relatively open.
- The OBR further notes: "the composition of [UK] trade with the US is skewed toward services rather than goods. The US accounted for 15 per cent of the UK’s goods exports and 10 per cent of its goods imports in 2023. In the services sector, the US has a larger role, representing 27 per cent of the UK’s exports and 19 per cent of its imports."
- The OBR's analyses all concentrate on trade in goods, not in services.
- The OBR has run some scenario analysis on the potential impacts of US tariffs on headroom. In scenario 1, the US implements 20ppt additional tariffs on Canada, Mexico and China with reciprocal tariffs. In scenario 2, the US levies these tariffs on the rest of the world – but there is no retaliation. In scenario 3, the rest of the world retaliates.
- In scenario 1: UK GDP is 0.2ppt lower than the OBR's central forecast in FY26-27 but then unchanged going forward as "after the initial disruption, this is broadly offset by trade diversion, where demand for UK goods rises as they are relatively cheaper."
- In scenario 2: Demand for UK goods exports to the UK falls 8% (based on -0.4 price elasticity). Inflation would then be 0.3ppt higher in FY25-26, but below the 2% target in FY27-28 and FY28-29 before returning to target. There would be a "moderate depreciation in sterling, mitigating some of this effect." GDP would then be 0.6ppt lower in FY26-27 with a permanently lower 0.3ppt decrease.
- In scenario 3: UK inflation rises 0.6ppt above the central forecast in FY25-26. "The peak impact on GDP is around 1 per cent in 2026-27. As GDP growth weakens, there are limited second-round effects on inflation, which then falls to 1.8 per cent in 2027-28... medium-term UK GDP is around ¾ per cent lower than in our central forecast"
- Both fiscal rules (current budget in surplus by 2029-30 and PSNFL falling by 2029-30) are met under all three scenarios (despite the hits to GDP), albeit only just in Scenarios 2/3. The OBR notes that scenario 2 and 3 have similar outcomes for the current budget deficit – this is due to the higher UK tariff revenue in scenario 3 offsetting the larger hit to GDP.
STIR: Repo Reference Rates
Apr-01 12:04
- Secured Overnight Financing Rate (SOFR): 4.41% (+0.07), volume: $2.636T
- Broad General Collateral Rate (BGCR): 4.36% (+0.03), volume: $945B
- Tri-Party General Collateral Rate (TCR): 4.36% (+0.03), volume: $898B
- (rate, volume levels reflect prior session)
