EU BASIC INDUSTRIES: DSM-Firmenich: Animal Health Unit Sale (bbg)

• -10,000 TYH6 112-22.5, post time bid at 1143:18ET, DV01 $680,400.
• The 10Y contract trades 112-22 last (+3.5).

We've just published our preview of the December Eurozone inflation round - DOWNLOAD FULL REPORT HERE

Silent Night for Prices Keeping ECB On Hold

• The Eurozone December flash inflation round is split across three weeks due to the holiday period. Following Belgium which printed already last Tuesday, Spain is scheduled to release data on December 30 ahead of Germany, the Netherlands, and Italy following over the course of the following week.
• Overall, analysts expect only limited moves in the Eurozone aggregate measures. Headline HICP is expected to recede marginally, to around 2.0% Y/Y (2.1% prior), while core is seen unchanged at 2.4%.
• Across categories, analysts expect the main mover again to be energy, which is seen coming down further into deflationary territory on a Y/Y basis to around -1.5% amid falling oil and gas prices.
• None of the remaining categories are seen to provide major impetus in December, with services roughly stable around 3.5%, food / alcohol / tobacco marginally firmer at 2.5%, and core goods remaining subdued at around 0.5%.

The latest pending home sales data for November reinforces other indications of a pickup in housing market activity as we head into 2026. The National Association of Realtors reported a pending sales index of 79.2 for the month, a 3.3% M/M improvement to the highest level in 33 months (all on a seasonally-adjusted basis).

• This bodes for a further improvement in future months in existing home sales, which had already posted a 9-month high in November. This index reading indicates that sales are nearing 80% of 2001 levels; they bottomed out closer to 70% at the turn of the year but remain well down from the peak of 125% set in October 2021.
• Regional gains were led by the West (+9.2% M/M) but there was an improvement across all of the other 3 regions.
• There aren't many further details in the report to explain the pickup - NAR Chief Economist Lawrence Yun is quoted as saying "Improving housing affordability–driven by lower mortgage rates and wage growth rising faster than home prices–is helping buyers test the market. More inventory choices compared to last year are also attracting more buyers to the market."
• The government shutdown means residential construction activity is only coming out with an extensive lag; we only get a combined September/October report for housing starts/permits on January 9 for example. Those series had been very soft through the summer, with permitting hitting multi-year lows.
• However there is a subtle but noticeable upturn in buyer activity as reflected in this report, in addition to mortgage purchase applications hitting post-2023 highs in November, and NAHB homebuilder sentiment picking up since September.
• These are all still at depressed levels but suggest that the market is stabilizing and potentially gaining some traction going into 2026.